Whaaat?

In short, what seemingly started as a way to get people to sign up for two-day shipping has turned into a major force in the world of entertainment. Prime Video may have started as a perk to draw in more Prime members. Now, it’s just as easy to believe that Prime Video may be its own draw, and two-day shipping a nice perk.

Tell me more!

Video Strategy

In 2011, video became a Prime perk. But the company saw that to get members to really care about video on Amazon, it had to offer something more distinctive and original. In 2013, the company began to do just that, premiering pilots for 14 shows that year. The company let customers rate the shows and, using that data, decided which to extend to full seasons.

The company has also long had its eye on movies—it says it plans to release 12 to 14 original films each year. It released the first, Spike Lee’s Chi-Raq, in February. Earlier this year, it picked up four indies at Sundance.

Video Potential

Amazon, however, isn’t a studio at heart; it’s a retailer and a tech company. So it’s not surprising that the way it does video dovetails with both of those strengths. The Amazon Video app, for example, includes “X-Ray,” a feature that allows the company to add a layer of clickable data on your screen, such as the names of the actors in a scene, served up by Amazon-owned IMDB. Its Fire TV—Amazon’s answer to Apple TV, Chromecast, and Roku—includes “ASAP,” a playback feature that predicts what you want to watch next—much like it suggests other products you might want to buy—and begins buffering it before you need to watch it. Meanwhile, Freeman says Amazon’s video service supports 4K and HDR for some originals.

Nice perks, but as with Prime Video itself, what seems like a perk at first has the potential to contribute more broadly to Amazon’s growth as a business.

Video Spill Overs

To understand how big a deal video is for Amazon, you need to understand how big a deal Prime is. The company won’t reveal how many Prime members it has beyond “tens of millions,” but it’s a crucial part of Amazon’s business. And once subscribers shell out $99 to become Prime members, that initial outlay of cash turns them into remarkably loyal shoppers.

And video, it seems, only makes them more loyal.

My 2 cents:

“Video might have seemed like a funny thing to pair with two-day shipping five years ago. But Amazon seems to have known what it was doing all along.”

If you ally Amazon’s analytical power and propensity to engage in pricing and content experimentation, you get an Amazon Video that is improving upon Netflix’s success with House of Cards. Amazon, the insane sales network that it now is, can at the same time carve a share of the new media space while reinforcing its Prime cash cow.

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