Amazon's Plan To Storm the Cable Industry's Castle

Randy Davis sends analysis of Amazon's acquisition of Twitch.tv, a move that indicates higher ambitions than simply another avenue for putting products in front of consumers. The Daily Herald think this is a sign Amazon is bulking up for a fight with cable companies, strengthening is bargaining position for getting (and maintaining) access to subscribers. "There are very few places in the U.S. where these four giant carriers allow independent networks carrying traffic from the data centers run by Amazon (and future Twitch.tv successors) to put that data on the carriers' controlled networks."

A related article at the NY Times argues Amazon is "betting on content," not wanting to fall behind the surge of new media productions from companies like Netflix. "There is a huge land grab for nontraditional models of programming. DreamWorks Animation bought AwesomenessTV, a popular YouTube channel, last year, and in March, Disney snatched up Maker Studios, a video supplier for YouTube, while Peter Chernin, formerly president of News Corporation, has invested in Crunchyroll, a streaming hub of anime. All of these deals are about content, but they are also a hedge, a way of exploring other production protocols that don’t involve prominent stars, agents and expensive producers." A different piece at The Motley Fool takes the acquisition as confirmation Amazon is developing its own ad network.

Comments

Subscribers?

[HalAtWork]

Sorry, you lost me at "subscribers". I am not going to subscribe to anything full of ads, or that may be full of ads in the future. I'm definitely not going to subscribe to receive user generated content either. This ex-battered cable wife is not making the same mistake.

Re:Subscribers?

[i kan reed]

And yet plenty of people are on huluPlus already.

Re:Subscribers?

[Anubis IV]

Are they really though? By every indication I've heard, Hulu's viewership has been steadily dropping for a few years now (from 24M monthly unique viewers to 19M to 12M between mid-2010 and mid-2012, which prompted the media companies owning Hulu to try and sell it just last year. And that's Hulu total viewership, not just for Hulu Plus. And those numbers seem to make sense to me, given that the commercials have been becoming more intrusive and frequent, while the blackout periods before episodes become available have been less consistent and more inscrutable as time has gone on (of the shows I watch on there right now, one is next-day, one is eight days later, and one appears to be one month later, though I had to figure that last one out on my own, since they never actually specified it anywhere, so I may be wrong). And Hulu Plus merely promised to offer more of the same. Not exactly a great value proposition for a cord cutter.

The latest numbers I can find for Hulu Plus are that they're hovering around 6M subscribers as of about four months ago, which is a modest improvement from last year (5M), but still puts them at only about 10% of Netflix's subscriber base. The dual revenue model of ads + subscriber fees does mean that they make more revenues per subscriber, but it seems as if they might be stalling out a bit as people get a taste of what it's like to cut the cord and don't want to see any more ads.

Re:Subscribers?

[FictionPimp]

Yep, I am not going to pay for the right to watch ads.

Either it's 'free' and I watch ads, or I pay for it and get no ads.

Also, I get to pick the device.

Re:Subscribers?

[Darinbob]

I am ready to subscribe, as soon as the shows I want show up there. But they're late. Two weeks and still no new doctor who. The whole point of hulu plus was to be seeing shows very soon after original air time. I've already got netflix if I wanted to wait until the season was over. I don't mind the ads that much because what it replaces was chock full of ads too (well, I've never had hulu plus so can't be sure how obnoxious they are).

What these services are missing is 'service'. They're very short on information, such as easily searchable databases of what they have. They also do not tell us what programs they will be adding in the future or when they'll be added. Broadcast meanwhile will say some show starts a season in two weeks, but no such promotion on the steaming channels. I'd like to see 'wish lists' too, to be notified if a missing movie shows up in the future or to give the channel a hint about what customers want to see. Granted this is all very very low budget stuff, but a little customer friendliness would go a long way.

Ad blocker blocker

[tepples]

It's called an adblocker.

"You appear to be using an ad blocker. To continue, please whitelist this site. Here are the whitelist instructions for the major ad blockers. To view this article without ads, please subscribe." What do you plan to do once this behavior becomes common? If you say "ad blocker blocker blocker", that has been tried, and it uses as much of your battery and monthly data quota as just displaying the ad.

All hostages to the last mile providers

[zerofoo]

It doesn't matter how much content amazon has, nor how many datacenters they have. Amazon, Apple, Google...etc are all hostages to the last mile providers. Their business models depend on that last mile for delivery of their product.

In the end, the UPS/FedEx model will probably prevail where content providers will pay a delivery company for delivery of their product.

Google seems to be the only company with the foresight to start building their own last mile network. Unfortunately, at the rate they are going my great great grandkids might have Google Fiber available in their area.

Re:All hostages to the last mile providers

[fredan]

It's only the ISP who can do this and build such system for caching content.

The concept of TOECDN, The Open Edge Content Delivery Network, previously known as The Last Mile Cache, is to cache content so close to the consumer as possible. TOECDN is the only solution to allow customers to have their own http-cache servers.

Instead of having X different cache solutions for the ISP to host and maintain, TOECDN combines this to ONE unified system/solution for all static content served over HTTP.

And anyone is free to use this solution. That's the hole point.

http://www.toecdn.org/

Easy solution

[tomhath]

There's nothing on TV worth watching anyway. Just turn it off.

Re:Easy solution

[some old guy]

Bingo! I haven't had a TV subscription since maybe 2004, and I don't miss it one bit. Yeah, I'm stuck with DSL, but it works, it's cheap, and it's local.

Comcast, Time Warner, and Verizon can all suck it.

AVP ... again?

[Archangel Michael]

Comcast vs Amazon, whoever wins, we lose!

Re:Home Internet

[mrchaotica]

And people subscribe to VOD services such as Netflix to view 90 minute toy ads such as The Wizard.

That's specious and you know it. Nobody has to watch The Wizard, the vast majority of Netflix's content doesn't have product placement, and Netflix can't do anything about it anyway (except maybe exclude the show entirely).

Shows on Netflix don't have added, separate ads, and that's the important thing.

Russian revolution?

[Dega704]

Part of me screams for Amazon to mercilessly crush the cable companies and salt their fields. The more reasonable side of me worries we would wind up trading one overpowered corporate overlord for another. It won't stop me from grabbing popcorn and enjoying the show either way, though; just to satisfy the bloodlust against these bastards.

Re:Russian revolution?

[phantomfive]

It's more than Amazon: Google, Microsoft, AOL, etc are all plotting how to do this.

Video advertisements are huge revenue generators, which is why every crappy website (including Slashdot) now is trying to find a place for them, and ideally generate video content. Some of these companies (Amazon, AOL, Hulu) are trying to create full episodic content, so they can generate even more revenue.

Remember:
Advertizers = revenue (or customers).
Users = product (or views).
Content = honey that attracts the users.

The GAzN Network

[PortHaven]

The Google Amazon Netflix Network - seriously, this is what they should do. They should basically, form a pact, get a few other big companies like Facebook. Then start popping out internet access points locally. Dump those billions into cabling and internet towers. By-pass Comcast/Verizon completely. And watch Comcast's worst nightmare.

Googe+Amazon+Netflix+Facebook = majority draw

Google and Amazon already have a lot of fiber. How much such a coalition earn from $20/home broadband?

Moychandising

[tepples]

movies and TV have steadily increased their product placement ads over the past decade. I'd say Netflix's content has plenty of product placement - it's just not under Netflix's control because it was there before Netflix even got the content.

Case in point: the Transformers films and DC/Marvel superhero films exist to sell toys. As Yogurt pointed out in Spaceballs, it's all about the merchandising.