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  • When Amazon enters an industry, incumbent companies usually freak out.

  • Whether it's pharmaceuticals, groceries, cloud computing or just

  • old-fashioned retail, Amazon has earned its reputation as a business

  • bulldozer. But when it comes to video, Amazon has so far been content with

  • just being a player, not the player.

  • I think Amazon Prime Video has spent a lot of money and has very little to

  • show for it today.

  • But that may be changing.

  • For years, Amazon has used video as a sweetener for people to subscribe to

  • Amazon Prime, the company's $119/year service.

  • A Prime subscription includes not just TV shows and movies, but shopping

  • discounts, access to music and books and, of course, free shipping on

  • Amazon deliveries.

  • At first Amazon's video strategy was to buy high-minded content, that

  • could win Hollywood awards.

  • Shows like 'Transparent' and 'Marvelous Mrs.

  • Maisel,' and movies like 'Manchester by the Sea' and 'The Big Sick.'

  • Under Roy Price, the former head of Amazon Studios, Amazon had some success

  • with this strategy.

  • 'Transparent' won the Golden Globe for best musical or comedy series in

  • 2015 and 'Manchester by the Sea' won the Academy Award for best original

  • screenplay in 2017.

  • But those hits still had relatively small audiences.

  • When Roy Price left Amazon in late 2017, Amazon CEO, Jeff Bezos, decided to

  • replace him with Jennifer Salke, a broadcast TV veteran.

  • Salke changed Amazon's video strategy to look for content that appeals to

  • broader audiences.

  • This better matches up with bringing people into the Prime universe and

  • keeping the ones that are already there.

  • I think you're going to see Amazon go after big, broad content.

  • Obviously, the most obvious example of this is they're doing 'Lord of the

  • Rings,' and there's no bigger, broader opportunity and shot on goal than

  • doing a 'Lord of the Rings' TV show.

  • Amazon bought the rights to 'Lord of the Rings' in 2017 for a cool $250

  • million, the biggest amount ever spent on TV rights.

  • Amazon plans to run at least five seasons of the series and has promised a

  • campaign to promote the show alongside J.R.R.

  • Tolkien's books on Amazon.com.

  • Amazon now has more than 100 million Prime subscribers.

  • With so many credit cards already on file, it makes sense for Amazon to

  • shift the purpose of Prime Video to connect content with commerce.

  • Unlike Netflix or HBO, Amazon can market its content within an Amazon

  • search for merchandise.

  • Already today, a search for 'The Hobbit' doesn't just show you the book,

  • but also gives you a chance to subscribe to watch the movie on Prime

  • Video.

  • Amazon's next big splash could be sports, particularly live sports

  • programing. The company has already acquired some streaming rights to

  • Thursday Night Football and Premier League soccer games, but it's yet to

  • land a huge, exclusive sports rights deal.

  • That could change in the coming years as rights to the NFL, the NBA and

  • Major League Baseball come up for grabs.

  • Amazon looks at content creation through a very different lens than a

  • traditional media company.

  • A traditional media company is, 'well how much advertising can I generate

  • from this?'

  • Amazon, the first thing when they talked about the NFL, the number one

  • metric they were looking at is new to Prime.

  • Meaning new people that have come into the Prime ecosystem because those

  • are people that spend a lot more over the year than people who are not

  • part of the Prime ecosystem.

  • The major U.S.

  • professional sports organizations might be a little hesitant to sell their

  • exclusive rights to a non-traditional player like Amazon.

  • But connecting commerce to content could make them a lot more revenue.

  • This is not just about showcasing football games on Thursday night.

  • This is selling you a jersey.

  • This is potentially selling you a ticket.

  • There's so much more that Amazon can do than just simply stream a game.

  • They can probably sell advertising better than any TV network because of

  • the data they have and they know exactly what I like.

  • They know I'm a Giants fan.

  • The bigger battle beyond just content could be ownership of the home.

  • Seamlessly connecting Amazon Echo to TVs and mobile devices could

  • revolutionize how people find shows and movies.

  • Getting the 'Grand Tour' from Prime Video.

  • There is an all out war for the control of your media life.

  • Home, car, on the go.

  • This is war, and I think the reality is these big tech platforms, who have

  • valuations, and market caps and cash piles that are massive relative to

  • traditional media, they're just getting started.

  • So far, Apple and Amazon really haven't gone toe-to-toe.

  • But as Apple also gets into original content, that competition is coming.

  • There is going to be a war.

  • It's gonna be all of these tech platforms feasting on the challenges

  • facing legacy media.

When Amazon enters an industry, incumbent companies usually freak out.

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Why Amazon Is Going After Netflix

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    Liang Chen posted on 2019/03/17
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