9th June 2016
Whatever else you might think of it, Amazon has got its PR operation sorted. Scarcely a week goes by without the online behemoth making the news in some way.
Whether it’s technological or marketing innovation, daft stuff about drones, or promising to deliver groceries within an hour, Jeff Bezos’ company is never far from the front pages, and not just in the specialist or tech press either.
Sometimes the news isn’t good (working conditions, tax arrangements, attitudes towards competitors, flops like the Fire mobile phone), but it’s always worth reading or viewing; and even bad news or negative coverage doesn’t seem to put anyone off using the company’s products and services.
So I was quite surprised then to see the company’s newest service not getting as much attention as it perhaps should. The service is Amazon Video Direct, or AVD. This has been touted in some circles as “Amazon’s YouTube killer”; while I’m not so sure about that (more in a moment), it could, if it takes off, have a huge effect on the marcomms industry.
I should of course add at this point that not everything that Amazon puts out is an unqualified success, as the aforementioned Fire phone, as well as the Fire TV box, demonstrate. But AVD looks like a good long-term bet.
So what is AVD? First of all, it’s not the same as its Instant Video service (which is itself a rival to the likes of Netflix), which streams existing or specially-commissioned content into Amazon Prime members’ homes.
It’s a service that allows companies and individuals to upload premium quality content for streaming and viewing.
When it was first announced last month, it was touted in some quarters as a YouTube rival but it’s nothing like YouTube at all. What Amazon wants isn’t your “cat lolz” videos that you’d otherwise upload to Google’s service. What it’s really after is a slice of the growing market for video advertising, which is increasingly dominated by Alphabet (Google’s parent company) and Facebook.
In fact, if you wanted to upload pictures of Felix doing tricks with a ball of wool, or of little Johnny falling off his bike, you’d find it a bit difficult. Unlike YouTube (which just requires a Google account and a bare minimum of technical knowledge), AVD demands that you not only have a Prime account, but it also wants all manner of proof of identity, as well as extensive captions and a full credit list.
It wants pro and semi-professional content creators; and it wants big brands. This suits some of those who’ve signed up: media companies like Condé Nast, the Guardian, Mashable and Goldwyn Films, as well as big brands like Mattel. And it wants to lock them (and more of us) in.
Amazon has always – like Apple – been very astute at sucking people into its ecosystem, getting them to stay there, and getting them to spend ever-increasing amounts. Take Prime. When it first launched, it was a way of saving money on postage (and getting quick delivery and other benefits) in return for an upfront subscription. If you ordered a lot of stuff, it was a big money-saver (and because you were saving money, you probably spent more – I know I did!).
After sucking up the LoveFilm service, Prime then became a way of delivering content straight into your home via the wonders of smart TVs and set-top boxes. When Prime Video’s content got better, and the range got more comprehensive, more people signed up and more people renewed their subs.
And they bought more stuff from Amazon (not just movies and TV shows, but more of everything).
Just last week Bezos told a tech conference in the US: “We get to monetize [our subscription video] in a very unusual way,” he said. “When we win a Golden Globe, it helps us sell more shoes. And it does that in a very direct way. Because if you look at Prime members, they buy more on Amazon than non-Prime members, and one of the reasons they do that is once they pay their annual fee, they’re looking around to see, ‘How can I get more value out of the program?’ And so they look across more categories — they shop more. A lot of their behaviours change in ways that are very attractive to us as a business. And the customers utilize more of our services.”
This means that Amazon has an advantage over rivals like Netflix, Hulu or Sky, who are trying to sell you more video content. Amazon can sell you pretty much anything you want – shoes, music, vitamin supplements, distilled water or books. Bezos spent $2bn last year on content for Prime – he sees it as worthwhile for boosting the rest of the business, as well as competing with Netflix
And this, in the end, is what AVD is about. There’s no point in trying to compete with YouTube, let alone trying to kill it off. It’s been around for a dozen years, has countless terabytes of uploaded content and – most crucially for Amazon – is difficult for anyone to make much money from.
What Amazon might be thinking about is a way of helping content owners and creators to monetise their content in different ways, but principally by tying them into the Prime ecosystem. Weirdly, AVD is Amazon doing the thing that Amazon does best – retailing. And it’s offering both content owners/producers and the viewer choice.
So, just as creators or record companies of film studios can monetise YouTube videos by forcing users to watch an advert beforehand, they can choose to play ads before anyone can watch their AVD videos for free.
However, they also have the option of letting users buy or rent their videos ad-free, just like they can with Amazon’s shows and films now.
There are more choices: a third option could be to make the video available to (yes, you guessed it) Amazon Prime members – who get Instant Video as part of their annual subscription – for free, without ads. Creators might also choose to package a series of videos together and offer them as an add-on subscription.
You can see why this – along with the (admittedly not overly-generous) royalties that Amazon will pay, based on hours streamed – is proving quite attractive to “pro” users. Even if it were just an alternative to YouTube, as opposed to a replacement for it, you can see why people would sign up.
And given that Amazon is promising huge amounts of data and feedback, allowing the uploader to tweak distribution or monetisation or even content in real time, this is a potential world-beater, and not just another video on demand or SVOD (subscription video on demand) service.
Early days yet, certainly, but this is a development well worth watching – and it’s a subject we’ll be returning to in the very near future.