Amazon’s video direct aims to take a sizeable chunk of YouTube’s content driven market by building up a suitable alternative
on May 10, 2016 12:53 pm EST
After its attempts to directly compete with Netflix Inc. (NASDAQ:NFLX), Amazon.com Inc. (NASDAQ:AMZN) has moved a step further from Prime Video by attempting to build itself a video portal that seems to be emulating YouTube. The video streaming service that kicks off today essentially allows users to upload, view, share and monetize their content to consumers across the board. Users uploading content have the option to designate whether their videos are free to users, available to rent, own or exclusive to consumers with a $99 Amazon Prime subscription.
Amazon’s attempts to control the living room and consumer entertainment have become considerably more aggressive. It has attempted to directly compete with Netflix via its Prime offerings; attempted to build its Echo speaker install base significantly via price cuts and marketing it heavily as well as its Kindle Fire and TV models which are regularly discounted heavily in North American markets. It has attempted to build up its own network of exclusive content as well as bring in exclusive deals with TV giants such as Epix and HBO. More importantly, it continues to do so while providing its services at an impressive discount of at least 10% when compared to its nearest competitor.
It is also relevant to note that Amazon is set to engage Google yet again in what is being seen as perhaps one of the biggest tech rivalries this decade, by directly going after one of its flagship products, YouTube. Amazon is actively working to expand its user base over time, using its position as an ecommerce giant to its benefit by essentially packaging all of its offerings in the same “Prime” bundle for consumers. YouTube controls a massive 20% of the video ad market which contributes to about $2 billion in the US market alone. Amazon currently offers a revenue split to consumers using its services by paying out 55% of ad-based revenue and about 50% of subscriptions, purchases and rentals. It will also pay a variable rate of between 6 cents per hour of video streamed overseas and about 15 cents per hour streamed in the US for Prime subscribers.
Amazon’s Direct Video service has an uphill battle to fight against most market competitors who are heavily entrenched when it comes to a tech industry already scrambling to get increased exposure to the video industry. Should it play its cards right, given its user base as well as its hardware install base and products, it could very well be a sizable market player if not a direct threat to YouTube in the near future in conjunction with its market-leading position via recently acquired Twitch.tv. Whether it is able to succeed in its current endeavours is yet to be seen.