Amazon offers content creators a raft of biz models


Details

Michelle Clancy

| 17 May 2016




Amazon has launched Amazon Video Direct (AVD), which allows video content owners to specify a range of different business models to generate revenue from their content.



amazon video directContent rights are also granted to Amazon on a non-exclusive base, meaning that videos can be used on, or taken from, other video platforms associated with content owners.

Jonathan Broughton, senior analyst for home entertainment at IHS Technology, and Merrick Kingston, principle analyst for connected home at the firm, broke down the monetisation options in a brief.

Users of the service can generate revenue using advertising, rental or purchase, Amazon Prime or as an add-on subscription channel in the vein of the Amazon Streaming Partners Programme. Content owners can also take a flexible approach, using a combination of the business models available. The analysts noted that the fact that Amazon is present in more living room TV sets than rival platforms, Amazon’s non-exclusive aggregation of content will also likely result in existing multichannel networks uploading of existing content onto the platform on a large scale, the analysts said.

Advertising and transaction methods give content owners 55% of net advertising revenue associated with viewed content and 50% of net revenues from transactions.

“Inclusion of content within the Amazon Prime subscription service will grant owners a revenue share of the service, which is calculated according to the amount of time users of Amazon Prime have spent viewing the content,” the analysts said. “This revenue share is currently fixed at $0.15 per hour for content viewed in the United States, while all other countries will generate $0.06 in revenue per hour. Total viewing hours of content viewed for remuneration is capped at 500,000 hours.”

If the content owner chooses to create their own subscription add-on channels through the AVD service, users specify consumer subscription prices for content accessed through a pay wall. Amazon will handle the consumer billing arrangement, and the company will transfer by wire 50% of the subscription fees collected on a 90-day basis.

In the case of content owners using multiple platforms in competing territories, Amazon’s agreement states that the company is entitled to the same licence fees and free trial rights as their rivals.

The analysts also noted that Amazon’s latest innovation in online video distribution not only grants content owners a valuable tool in monetising their content, but also grants content producers new insights into their audience, including reporting what is being watched, how long viewers remain engaged, and how this consumption behaviour varies by market and geography.

“AVD’s analytics platform offers a compelling tool kit that will allow both established and up-and-coming content publishers to test and tailor the content offered in various locales and, over the longer term, maximise usage and revenues,” they said.

The flexibility of business models offered allow for a wider range of content creators to be organically aggregated onto the platform. At the user-generated-content end of the scale, advertising-funded distribution ensures that the maximum audience is reached. Meanwhile, as successful independent content creators move into professional production, paid content models will take over, also supporting existing owners of professional video content. These foundational principles are not novel, and underlie similar recent initiatives from Comcast’s Watchable and Verizon’s Go90. However, Amazon is prepared to offer creators a far more varied set of remuneration models in a single platform.

Amazon has a more limited reach than online video giant, YouTube. However, the installed base of Amazon-specific streaming devices will likely appeal to many content owners looking to make the jump to primary household TV screens where the majority of viewing still takes place and most content revenue is created.

Consider: the IHS Connected Devices Intelligence Service estimates that by the end of 2016 Amazon’s Fire TV and Fire TV Stick platforms will reach an installed base of 14.1 million, reaching 30 million by 2020.

“In the market for exclusivity-backed user-generated content, AVD’s closest US competitors cannot match AVD’s living room scale,” they said. “Verizon’s Go90 has no living room scale, because the service is accessible only from portable devices. Comcast’s Watchable – available on the X1 platform – has well below ten million subscribers.

In addition, Amazon’s non-exclusivity in aggregating content will also likely result in existing multi-channel networks, and larger user-generated-content library owners, uploading content onto the platform wholesale.

“Finally, the addition of add-on channels marks a continuation of Amazon’s existing approach to content aggregation,” the analysts concluded. “By placing pricing and subscriber-management responsibilities firmly in the hands of content owners, the platform absolves itself of the heavy task of curating content, ensuring that the most appealing content on the platform will gain prominence. This free-market approach could be a serious threat to Netflix and other competing services, because it enables the discovery of new talent and cult content, which has previously proven so valuable to these kinds of services.”