Is this the year that Amazon beats Netflix?
James R | On 29, Sep 2014
At the start of 2014, though, that started to change.
Amazon, which bought out LOVEFiLM years ago, rebranded its UK streaming arm as Amazon Prime Instant Video in February 2014. The name wasn’t an improvement, but everything else has been.
Since the relaunch, Amazon has stepped up its game considerably. It is no coincidence that the move was accompanied by the announcement that Ripper Street would be resurrected after its cancellation by the BBC for a third season (to premiere on Amazon before being broadcast later on the Beeb). The message was simple: LOVEFiLM Instant was dead. Amazon was alive – and coming out kicking.
Netflix, though, remained the leading force in VOD, thanks to its decision to produce its own content: ever since House of Cards premiered 18 months ago, it hasn’t just been a provider, but a creator too. And a creator of good things, at that. The opening credits of their show alone, in crisp HD, spoke volumes about the amount of cash that was being thrown at the screen.
Amazon, you got the feeling, had a long way to go until they could ever catch up. After all, Netflix was cool. It was a video on-demand company. The other was a shop.
But the retailer has some serious dough to fling into its VOD vault too. Netflix and Amazon share a licence for BBC TV shows and Disney films, but in the past six months, Amazon has signed a slew of promising exclusive deals, both big screen and small.
In terms of TV, an agreement with NBC Universal has landed Amazon Heroes, Battlestar Galactica, Parks and Recreation and – perhaps most importantly of all – the recently cancelled Community (a contract that was sewn up just before Yahoo! jumped in and brought Dan Harmon’s sitcom back from the dead). A deal with Disney ABC saw the whole of Lost arrive exclusively at the start of this month, while it now boasts Mad Men Seasons 1 to 4 too. Even its less headline-grabbing titles, History Channel’s Vikings and Michael Bay’s pirate series Black Sails, have attracted their own pockets of fans.
In the LOVEFiLM Instant days, the site already had series such as The Walking Dead and 30 Rock under its belt, but combined with these newer additions, Amazon’s television line-up looks increasingly formidable.
As for movies, a deal with Warner Bros. has quickly become Amazon’s most valuable partner, giving it almost all the Batman films – including a host of animated Caped Crusader titles – and titles such as Soderbergh’s Contagion. Amazon has also continued LOVEFiLM’s legacy for foreign, indie and arthouse releases, offering The Place Beyond the Pines, The Broken Circle Breakdown Johnnie To’s Drug War.
This last month has seen Netflix add Skyfall to its ranks. Next month, Amazon will add Inception. Suddenly, the two subscription services seem evenly matched.
With that growing catalogue of titles has come an expanding base of users.
In 2013, it had more than 10 million Prime subscribers – a number that, as of the start of 2014, has doubled to at least 20 million. That may pale in comparison to Netflix’s 50 million subscribers around the world – membership has soared 78 per cent in the last 12 months – but Amazon’s rival is gong through a period of aggressive expansion into new territories. Amazon, on the other hand, is already present in countries around the world; it has a horde of potential customers already built into its business.
There are benefits, it turns out, to being a shop after all.
Indeed, that key commercial difference between the companies is central to Amazon’s recent rebrand – and its whole strategy. February also saw the launch of Amazon Instant Video, the non-Prime sibling to its subscription service, which offers videos to rent and download. House of Cards may be on Netflix as part of a subscription, but loyal Amazon customers can stream it on their site too. Like its recently launched Fire smartphone and tablets, not to mention its roster of ebook and MP3 assets, the company’s tactic is simple: Netflix wants to be the site you go to for streaming video. Amazon wants to be the site you go to for everything.
October will also see Amazon launch its first set top box, Amazon Fire TV, which is designed to rival Roku, Chromecast and Apple TV. If it can find a space by your telly, the device will hook you up to Netflix as well as Amazon Prime – and give you a library of films, shows, songs, games and books to buy too. It’s a digital shop in your living room; one that could generate more revenue than Netflix even with a fraction of its subscribers.
It’s a bold, some might say bonkers, approach to the digital media age. But the figures so far suggest it might work.
Sales figures have not been announced, but it has reportedly been the best-selling streaming box on Amazon US since its release in April. Amazon UK’s streaming figures, meanwhile, have surged by 70 per cent since its rebrand.
Recent research from Qwilt shows that Amazon Instant Video was the third-most-popular US streaming service in March 2014. Netflix led with 57.5 per cent of downstream traffic, while Amazon saw its share of traffic multiply five times from 0.6 per cent (March 2013) to 3 per cent. In other words, Netflix made up 19 times more downstream traffic than Amazon – down from 87.5 times one year earlier.
The tide has not turned yet, but the shift in current is significant – and could become stronger this month. Why? In a word: Transparent.
Amazon has started to produce original content in the last year, introducing its Amazon Studios pilot scheme, which allows people to vote on their favourites and decide what gets commissioned. While previous shows such as Alpha House and Creative Galaxy have been disappointing, this weekend marked the premiere of Transparent, the new series from Six Feet Under creator Jill Soloway.
The story of a father who comes out to his family as a woman, the programme is a big step for Amazon: not only does it tackle an important topic that is normally overlooked by TV, it’s also fantastic to boot (read our review of Transparent). Just like Kevin Spacey’s political thriller 18 months ago, it feels like the start of something new; proof that Amazon can create a classic piece of television just as well as Netflix. Transparent isn’t just their Orange Is the New Black. It’s their House of Cards too.
That matters more than the content, the media coverage and even number of users: Amazon has to be perceived as a viable competitor against Netflix. It has to be seen as a studio as well as a shop.
Transparent can achieve that. The show’s progressive subject matter, combined with its exception quality, is the kind of combination that can boost a company’s image. Amazon, for the first time, is not just the home of must-see TV: it’s cool.
Is this the start of the year in which Amazon beats Netflix? In 12 months’ time, the video on-demand race could look very different indeed.
Click here to read our interview with Jeffrey Tambor, Jill Soloway and Amazon Studios’ Head of Comedy, Joe Lewis.