For struggling SVOD providers, the allure of big subscriber gains from Amazon Channels may seem too good to resist. Unfortunately, they may have to give up far too much to get it.
At IBC in Amsterdam last week, I talked with several executives from online video providers about their businesses. One recurring theme came up in those conversations: Amazon Channels. Each person told me how valuable Channels was to them. However, there was always a big ‘but’ after the initial praises.
The real problem with Amazon Channels for video providers was crystalized for me by one executive. She explained that the long-term success of an SVOD service relies on three main components:
- Access – customers and prospects must be able to find easily, subscribe to and use the service
- Discovery – subscribed content must be easy to discover and watch
- Community – the service needs to foster a sense of community around the service brand and content.
Here’s how Amazon Channels helps a video service with each of these components.
By all accounts, Amazon is a master at helping its customers find a service and subscribe to it. CBS says that half its subscribers come via Channels. Other, smaller, providers told me that Amazon Channels is responsible for half or more of their customers.
Amazon makes it very easy to find subscribed content. Industry leading search and recommendations help connect a viewer quickly to a show or movie on the service. Unfortunately, when it comes to searching for content Amazon Channels knows no loyalty to a partner service. For a Channels partner, content from a competitor is as likely to be displayed in search results as their own.
A vendor-neutral search and discovery process might appear to be a good thing for consumers, but in some cases, it is not. For example, a subscriber to Discovery on Amazon may be scrolling through the channel contents looking for shark week videos. Doing a quick search to accelerate the process can lead to confusion. Searching on “Shark” will return many titles spanning many different channels, including rental and purchase options, not just content from Discovery.[Update: I just found another example of this. Searching for the show Vera on a Fire TV I was offered season 1 on Hulu as my only viewing option. However, the latest season is available in BritBox, for which I also have a subscription.]
Amazon fails to deliver any real sense of community around a Channels Partner’s content. The branded experience is weak, providing just a list of shows on the Roku version of the Amazon Video app. The only real community inside Channels is the broader Amazon experience. Worse, it can be very confusing to subscribers. For example, the shark week fan discussed above may think it is Discovery, not Amazon, trying to get them to pay more by offering them rental videos. One executive told us this happened to them and the subscriber was very angry with their subscribed service about it.
Community, discovery key to video service future
It is essential to establish a branded experience with subscribers. Only then can they begin to associate their interest in a content genre with the brand that is bringing it to them. With that branded experience, the service provider can grow a sense of community. It can also become a valuable part of the community. Crunchyroll is a great example of how a video service and community can become intertwined and help each other.
Amazon reduces an SVOD service to a list of content. When a consumer subscribes to a new SVOD service through Channels, they are expanding their Amazon video library, not developing a relationship with a brand. Since all Channels essentially look the same they become interchangeable parts. In this environment, the price is the only meaningful differentiator. Put another way, as soon as another provider offers the same or similar content at a lower price; subscribers are very likely to switch.
To be sure, the allure of big subscriber gains from Amazon may seem irresistible, but a video service provider may be giving up far more than they bargained for to get it.
Why it matters
Amazon Channels has had remarkable success at helping SVOD services grow subscribers.
However, these gains come at the risk of the future health of the business.
SVOD services lose brand identity and can’t grow a community around their service inside Amazon Channels.