Amazon is denying that it will launch a standalone (Netflix-like) streaming service. This in the face of much speculation, both in the business community and online.
Amazon has been steadily increasing the amount of online content it offers through its Amazon Prime service. Just days ago they announced an agreement that will allow them to provide content from Viacom. Amazon Prime is a $79 per year service which provides members free two day shipping on many Amazon products, plus access to instant video streaming of approximately 15,000 TV shows and movies.
Netflix CEO Reed Hastings got the speculation rolling hot and heavy last month when, in a letter to shareholders, he warned that Amazon may launch a standalone streaming content service at less than Netflix’s current $8 month price.
But it’s not going to happen, according to Brad Beale, Head of Digital Video Content Acquisition at Amazon. In an interview with GigaOM.com, Beale said “The bundle of benefits that come with Amazon Prime make perfect sense to offer to customers. The way that Prime Instant Video is offered today — we’re going to continue that approach at least into the near future.”
That sounds pretty definitive, at least near-term. And it makes sense that they wouldn’t break it out.
Amazon has been all about the ‘ecosystem’ lately. If they broke streaming out as a separate service, users might opt for that rather than Amazon Prime. And if they don’t have Amazon Prime, they may be less likely to purchase products from Amazon because they wouldn’t get the two day free shipping. Amazon Prime also provides books through the Kindle Lending Library, which ties the consumer even more into Amazon’s ecosystem… and makes them more likely to buy books, movies, and other products from Amazon.
Amazon Prime is more than a key piece of Amazon’s strategy going into the future – it’s the linchpin that pulls everything together. To break out a part of Amazon Prime and sell it separately as a monthly subscription would be destructive to Amazon’s existing marketing plan. Besides, prorated out, Amazon Prime is already cheaper than Netflix is $8 per month subscription, so there’s not much upside for the consumer nor Amazon, long term, in breaking out a standalone service.