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Video Briefing: Amazon is flooding the zone in the video market

Amazon courts U.K. ad industry with behind-closed-doors briefing.

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On Facebook, YouTube and the other major social platforms, video makers mostly make money from advertising. On Amazon, they can choose up to four different sources of revenue — and all of them are growing. It’s a big reason why one top TV executive recently told me that “Amazon’s the beast that hasn’t really woken up yet.” But it will soon.

THE KEY HITS:

  • Video makers see Amazon’s Prime Video Direct as the centerpiece of how the company will work with most media companies in the future.
  • Amazon is steering video programmers to use Prime Video Direct, which lets creators upload content directly into the Prime Video service, among other distribution options.
  • Channel subscriptions and consumption-based payments are the key revenue sources from Amazon, but advertising (and transactions) are growing.

We’ve been pretty aggressive in covering just how influential Amazon is becoming to video makers — from publishers to YouTube networks, TV networks and film studios. That influence is best exemplified in Amazon’s Prime Video Direct (PVD) program, which offers multiple distribution options for video makers. OTT programmers can sell their streaming channels as add-ons to the main Prime subscription. Digital and TV publishers can upload content directly into the Prime video service and get paid by how much people watch their programming. Creators can also make some content available for free and get a cut of ad revenue. Finally, programmers can make their content available for purchase or rental.

That’s four different ways of making money, which is attractive to a wide group of video providers — and to Amazon, which wants programmers to use PVD, sources tell me. “[PVD] can handle everything: it can handle channels; it can handle TVOD; it’s the umbrella content ingestion engine that can power everything,” one studio source said.

To be sure, Amazon still has a lot of work to do. In last week’s Video Briefing, we quoted a news publisher who has used PVD for some time saying that Amazon still isn’t optimized for news and that there’s still a ton of manual work required to get videos uploaded to the platform. Others have said that viewership and revenue are still limited.

But there is a high potential for growth, especially as Amazon’s ad business grows. (Right now, the top Prime revenue streams for publishers are channel subscriptions and direct payments from Amazon based on consumption of the publishers’ video inside the Prime video service.)

What makes Amazon and PVD really compelling is its ability to hit customers at different points of interest. As one longtime film distribution exec recently told me, an Amazon user might stumble upon a movie for sale for $25 and think it’s too pricey, but then they might be shopping for diapers and see that same movie available to rent at a lower price. Or, they might be watching a movie or TV show on Amazon Prime video and see a recommendation to watch that film next.

“There will be so many options to reach the customer,” this exec said. “You can catch them at all these different points, and there’s a decent chance they’d be willing to ‘pay’ for that content at some point along the chain.”

This week on… Amazon
Staying on the Amazon train for one more nugget: The company is looking for a head of content for a new “live streaming video initiative,” according to a job listing. This could be tied to the Bloomberg news report that Amazon-owned Twitch wants to take on YouTube by pursuing livestreaming deals with non-gaming media companies and YouTubers. (Again, there are multiple ways Amazon has its hooks in the video industry — and we haven’t even talked about its rebooted studio and original content business.)

Confessional

“It’s always a balancing act when it comes to any new initiative: You don’t want to be the last man at the party but it’s hard to commit too much at the top because the economics of the game are so tight. We’re seeing interesting growth on [Facebook] Watch across some of our library stuff that was made for other platforms. But Watch has not been as easy to crack as feed-based video at one point was.” — Distributed media publisher

Numbers don’t lie
+17 percent: The digital ad market grew by this much in July year over year, according to Standard Media Index. (Linear TV grew by 3 percent when factoring out the World Cup, but I don’t think that’s entirely fair to either side.)

$55 million per year: How much ESPN is paying for Italy’s Serie A rights for ESPN+.

What we’ve covered
Facebook is letting a handful of publishers sell their own inventory:

  • Some publishers can now sell mid-rolls across their Facebook pages and individual shows.
  • Watch ad revenue is growing, but a high volume of views is needed for the dollars to be meaningful.

Read more about the latest on Facebook Watch here.

Portals are fading as video-syndication revenue sources:

  • Multiple publishing sources said video syndication revenue from portals such as Oath and MSN has either plateaued or is going down over the past year.
  • Facebook and Twitter, meanwhile, are growing as syndication sources — but YouTube still reigns supreme.

Read more about the changes in video syndication here.

What we’re reading
How Hollywood is racing to catch up with Netflix: Here is a good refresher and comprehensive deep dive on how everyone from Disney to AT&T and Time Warner are getting more aggressive about competing with Netflix.

YouTube is expanding unskippable ads: Next week, all channels eligible for YouTube advertising will be able to run unskippable ads.

Oh, and one more thing on Amazon: The company has held talks with at least two movie studios — Sony and Paramount — to co-finance movies in exchange for streaming rights, according to Bloomberg. Bloomberg’s report pegs Amazon’s 2018 content budget at $5 billion. And if that’s not enough, Amazon might also be launching an ad-supported streaming app for its Fire TV devices, according to The Information. Amazon!

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