Amazon | 5 important things you need to know about Amazon's content business

 

5 important things you need to know about Amazon's content business

[caption id="attachment_4955" align="aligncenter" width="347"] Amazon[/caption]

Amazon sells almost everything in the world.

The company's original identity is a 'content distribution platform' before it is a global merchant.

As you know, Amazon started out as an online bookstore and sold the physical content of books first.

We are now distributing various digital contents such as e-books, videos, sound sources, apps, and skills (Alexa).

Information and communication (ICT) technology, which has emerged today, is also affecting content consumption behavior. This will also change Amazon's content business.

The last decade has given particular strength to video content.

The growth of the subscription-type VOD (SVOD) market may also have been affected.

Amazon creates content in its own studio and also invests in popular video platforms.

It doesn't seem like Amazon is targeting content itself.

We are trying to grow our own ecosystem by providing content with the benefits of 'Prime Membership', a paid membership service.

The dominant view is that content is used as a means of collecting data, analyzing customers in detail, and providing customized services.

Today, based on the progress in recent years, Amazon's content business

Let's take a look at 5 features.

1."I know what you'll like, but I've prepared everything"

[caption id="attachment_4957" align="aligncenter" width="368"] "I know what you'll like, but I've prepared everything"[/caption]

Amazon also appears to be an all-rounder in the content business. It has most digital content such as e-books, videos, sound sources, games, apps, and skills.

How Amazon entered the content business

“Amazon.com was initially an online bookstore”

"This raises a very rudimentary question: 'How can I change the way I read books?'"

"Books are heavy and difficult to carry."

“The ‘Kindle’, released in 2007, was the realization of the idea of ​​‘Is it possible to read a book easily anytime, anywhere without sacrificing reading sensitivity’?”

"The Kindle idea came out with customer convenience first."

“If you enter the e-book business, your relationship with existing publishers may deteriorate.”

“But it is because of the demand of the profit customers who started this business”

"This gives an opportunity to independent publishers who are excluded from the existing publishing industry, through the 'Kindle Publishing Service'"

“The Kindle aims to create an environment where a book can be downloaded in 60 seconds and read with a material similar to paper.”

Since the Kindle led the digitization of the publishing industry, it seems appropriate to view that Amazon opened the prelude to 'digital content distribution' with e-books.

Prime Music, a music streaming service, is available for $7.9 per month.

It also supports watching personal internet broadcasts centered on games through 'Twitch'.

Twitch, which streams live in over 200 countries worldwide, is rated as the second most engaging platform after Netflix.

Paid membership 'Amazon Prime'

Furthermore, Amazon uses the paid membership service 'Amazon Prime' as a hub for content distribution.

For a prime annual fee of $119, you get more than just fast shipping.

You can enjoy Prime Video, Prime Music, Twitch Prime (purchasing game items, etc.), Prime Photo (photo storage), Prime Reading (e-book), and content services as a package.

Apart from Prime, the 'Skill Store' and App Store, a 'skill' market that operates 'Echo', an artificial intelligence (AI) speaker, are also included in the content service.

2. Paid membership service that has become a content distribution platform

[caption id="attachment_4958" align="aligncenter" width="375"] Paid membership service that has become a content distribution platform[/caption]

As mentioned earlier, Amazon Prime is the company's core content distribution platform.

Content service, a Prime membership benefit, helps retain existing paid members or attract new members.

Jeff Bezos says Prime Video viewers are more likely to convert to Prime Paying members than those who don't

Consumers can receive differentiated benefits, such as accumulation and discounts, when they sign up for a specific company's membership service for a fee.

The more you receive benefits beyond the subscription fee, or the more you spend here, the more you will stay on the platform as the benefits accumulate.

This results in expanding the ecosystem of the platform.

As a result, Amazon.com becomes a 'living platform', and it is difficult for consumers who benefited from this to escape.

In particular, Amazon's content service is evaluated as contributing to increasing the number of Prime members 'efficiently'.

In fact, Prime members spend more than non-members.

According to Consumer Intelligence Research Partners, they spend an average of $1,300 a year.

That's $600 more than non-members of $700.

"If we win the Globe, it helps sell more shoes," Bezos said at the 2016 Los Angeles Tech Conference.

If Netflix simply makes money from subscription fees, Amazon gets more revenue through subscription fees + additional shopping for prime members.

It is only natural for a company to focus on the content business centered on the video to grow the prime ecosystem.

3. Aim for consumers with original content and channel alliances

[caption id="attachment_4960" align="aligncenter" width="374"] Aim for consumers with original content and channel alliances[/caption]

One of the main benefits of Amazon Prime is Prime Video.

In fact, even before Prime Video, Amazon operated video services through 'Unbox' and 'Amazon Instant Video', where you can download movies and TV shows.

However, he said he felt a sense of crisis as Netflix grew rapidly in SVOD, a subscription video service.

It is said that this led to the launch of 'Prime Video', an unlimited video streaming service in 2011.

"Amazon's strategy was to provide more content to its prime customers than Netflix."
“I thought if this strategy worked, Prime subscribers would only use Prime instead of double-spending Netflix.”
"Amazon's attack on Netflix was not completely successful, but it produced unexpected results"
"The so-called 'double viewers' have increased"
"Five years later, in 2017, Amazon has established itself as a good companion service with Netflix"

Although Amazon is the rival of Netflix, it is considered to be the second largest. However, the two are considered to be complementary.

4. Video streaming 'All-rounder' is a sports broadcast

[caption id="attachment_4961" align="aligncenter" width="362"] Video streaming 'All-rounder' is a sports broadcast[/caption]

They also make dramas and TV shows, but CNBC predicts that the wild card of Amazon entertainment content is 'live sports broadcasting.

Sports live broadcasting is still a market dominated by traditional broadcasters and cable and satellite operators.

However, the broadcasting and viewing platforms are gradually shifting to social media.

It is a land of opportunity for Internet companies. Amazon wins the rights to broadcast several sports events, including the National Football League (NFL), men's professional tennis, UFC, and soccer.

According to CNBC, Amazon signed a contract with the UFC last year.

During the negotiations, he even asked the UFC to schedule more women's fights.

That's because internal data suggests that women's competitions prove to be more appealing to prime members.

The will to solidify the base of Prime members, the core content consumers, is also evident here.

In addition, Amazon participated in the acquisition of Yes Network, a local sports channel that broadcasts New York Yankees games. It is said that he also bought the rights to broadcast 20 of the 2019/20 Premier League soccer matches.

Separately, the direction of Amazon's sports broadcasting rights seems to be in online advertising.

There is a lot of data on Amazon. In particular, there is a wealth of data to help us deliver targeted and personalized ads to our audiences.

This is also a big difference from Netflix, which aims to focus only on movies and dramas without commercials, news, or live sports broadcasts.

5. Invest in external content platforms aimed at millennials

[caption id="attachment_4962" align="aligncenter" width="343"] Invest in external content platforms aimed at millennials[/caption]

There is a limit to supplying innovative ideas only from within.

To seek synergy with external blood transfusions, Amazon has been steadily investing in external content platforms.

In particular, platforms aimed at millennials stand out.

An example is 'Taste Made', a lifestyle and food digital media channel that attracted $35 million in investment.

Amazon participated in the investment along with lead investor Goldenman Sachs Growth Equity.

This channel operates 6 studios around the world, including LA, São Paulo, and London.
We are streaming videos from YouTube, Roku, Apple TV, Prime Video, and our own app.

In particular, Amazon has appointed Andrew Saunders, who oversaw the company's global brand and marketing, as the head of its entertainment marketing.

Thunders originally served as vice president of content innovation and creativity at NBC Universal, so it is likely to add strength to Amazon's content business.

By producing and distributing content on their own, they can directly secure user's content preference + consumption data and analyze their tendencies.

Because it is data based on their own original content, it may be that Amazon does not have it.

I think this could be data that Amazon is curious about.

Today, we learned about Amazon's content business.

Do you watch Netflix or Amazon or both?