nScreenMedia OTT multiscreen media analysis

Amazon Prime 50+% penetration irresistible to SVOD, advertisers

Amazon Channels

eMarketer estimates that more than half of US households will have at least one person with an Amazon Prime membership by the end of 2019. Such reach makes Amazon almost irresistible to video providers and advertisers.

eMarketer forecasts that 51.3% of US home will have at least one person with an Amazon Prime subscription by the end of 2019. By 2021, the company thinks Amazon will have added another 7.8Amazon in half US homes 2019 million homes to the Prime total to reach 71.7 million, of 57%.

Hard to ignore Amazon Channels

Amazon Channels continues to be a useful tool to help SVOD providers find and acquire new subscribers. CBS’s former CEO Les Moonves commented last year that Amazon was “absolutely amazing in terms of growing our subs.” Other SVOD providers have told nScreenMedia that they are now getting as many as half of their subscribers through Amazon.

As Amazon’s reach grows, so does its ability to sell partner SVOD services. Moreover, a program like Amazon Channels that can bring targeted access to more than half of US homes is unmatched by any other SVOD aggregator. For example, Roku and Hulu both recently announced they would begin selling partner SVOD services through their services. However, Roku can only offer 27 million active accounts and Hulu 28 million, less than half of Amazon’s reach.

While such reach might be irresistible, it does not come without problems. A new one could be figuring out how to benefit from the influx of lower income Prime subscribers.

New members harder to sign up

eMarketer says that lower-income households will drive continued growth in Prime membership. Amazon has already adjusted its pricing to make it easier for people on a budget. For example, the company has a special $5.99 a month rate for people on government assistance, a 40% savings over the regular $119 a year cost.

Direct-to-consumer video providers that are Amazon Channels partners will need to consider similar approaches if they are to benefit from the expanding Prime membership. However, with Amazon already taking as much as half the subscription fee further discounts could be difficult or impossible.

Bodes well for video supported content

Amazon moved into the world of free-ad-supported video at the beginning of 2019, with the launch of IMDb Freedive. Though it is a standalone product, Freedive to tightly coupled with Fire TV. Watch a show in Freedive, and it appears automatically in the Fire TV interface. Expect the coupling between Fire TV and Freedive to get much closer in the coming months.

The availability of free quality content through Fire TV is an important selling point for consumers. Free ad-supported content is especially compelling to those lower income homes eMarketer suggests are coming to Prime.

Amazon has a massive trove of information about its members and is very effective at leveraging this data to market to its Prime Members. Such marketing prowess is why eMarketer forecasts that Amazon could grab as much as 7% of total digital ad spending in the US by 2020. The same marketing ability could help Amazon gain a large share of digital video ad spending through Freedive and Fire TV.

Why it matters

Amazon Prime is forecast to reach more than half of US households by the end of 2019.

A partner with such huge reach and effective marketing tools is difficult to ignore for SVOD providers and advertisers.

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