Jeff Bezos was crystal clear about how video helps Amazon: it helps the company sell shoes! Whatever the company does with Amazon Video, it all comes back to retail in the end.
In an interview at the Code Conference this week, Jeff Bezos expounded on the value of Prime Video to his business.
“When we win a Golden Globe it helps us sell more shoes.”
Successful shows like Transparent bring more people to Prime membership, and Prime members buy more things in the Amazon store. He also said there is another benefit to Prime Video:
“People that use Prime Video renew <their membership in Prime> at higher rates and convert from free trials at higher rates.”
As Amazon is primarily a retailer, Mr. Bezos doesn’t think Prime Video competes with Netflix for customers. However, it does compete with Netflix for content. He says the company can afford to sell premium content cheaper as it can make up the difference in boosted sales. This suggests that the company can afford to pay more for content for the same reason. This is something Netflix simply can’t do.
At first glance, the decision to allow consumers to subscribe only to Prime Video, with no shopping benefits, seems to undermine this retail-first strategy. However, now Amazon is in the business of selling other SVOD services through its Streaming Partners Program, retail is still the focus. Amazon Video is now a storefront for selling other subscriptions. In that context, it makes sense to allow consumers to subscribe to a standalone video service.
One apparent anti-retail move by Amazon was to ban the sale of Apple TV. When asked about this, Mr. Bezos said that in order for the company to sell Apple TV, Amazon Video would need to be available on it under “acceptable business terms.” Clearly, Apple’s 30% fee for services on its box is not acceptable to Amazon.
Chapter 1: Amazon’s video strategy (0:30)
Chapter 2: Why Netflix isn’t a competitor (1:35)
Chapter 3: Why Amazon allows people to subscriber to just video (2:55)
Chapter 4: Why Amazon banned Apple TV (4:40)
Chapter 5: The total focus of Amazon (5:50)