Posts for 'Commerce'

This week we go on a “field trip” to India, where a battle between multibillionaires - at the intersection of streaming, marquee sports, mobile, commerce and FASTs - provides a glimpse of the future.

First up, we discuss news that Viacom18 Media Pvt. a joint venture between Paramount Global and multibillionaire Mukesh Ambani’s conglomerate Reliance Industries Ltd., the most valuable company in India - which in 2021 won the rights, for $2.7 billion, to stream the hugely popular Indian Premier League (IPL) cricket games - and intends to do so for free to consumers.

Viacom18 Media actually poached the IPL streaming rights from Disney, which had them previously and used the games to drive Disney+ Hotstar subscriptions. Disney's direct-to-consumer strategy remains murky as Colin and I discussed 2 weeks ago.

The move underscores trends that Colin and I have discussed extensively around marquee sports moving from broadcast/cable to streaming (most recently in January, with fuboTV's CEO David Gandler) and the accelerating pace of free ad-supported streaming TV (FAST).

Next, we discuss “miniTV,” a set of freely available video content that is placed front and center within Amazon India’s shopping app. While miniTV, which launched in May, 2021 got off to a modest start, apparently in 2022, its first full year of operations, it has picked up momentum. This is due to the popularity of certain original programming that Amazon has invested in.

Amazon’s strategy of purposely giving away premium video for free parallels what it has done with Prime Video, investing heavily in originals like “The Lord of the Rings: The Rings of Power,” without seeking to directly monetize them. Rather, Amazon uses its massive commerce business to subsidize the cost of content creation, because it has been able to demonstrate to itself that video drives higher levels of Prime acquisition/retention, and Prime members buy more stuff from Amazon, of course.

Jeff Bezos articulated this “flywheel” in an interview with Walt Mossberg at the Code Conference in 2016, putting as fine a point on it as one can imagine, by famously saying “When we win a Golden Globe, it helps us sell more shoes” (start at the 36:56 mark for the segment). Amazon’s approach to subsidizing video is virtually inimitable, except perhaps by Apple and Google, and should justifiably strike terror in the heart of every media company CEO.

In India, with miniTV, we are seeing Amazon run the same playbook, except absent a Prime membership requirement, and with a more specific focus on mobile consumption, primarily by younger viewers. If media company CEOs around the world were not already on high alert from Prime Video, miniTV should put them on an immediate DEFCON 1 footing.

(As a side note, I believe that another flywheel, in CTV advertising, is also developing, as I wrote back in June, 2021. Speakers at next week’s VideoNuze CTV Advertising PREVIEW: 2023 will emphatically drive this home. Note, complimentary sign up is available.)

Last but not least, and at the risk of stating the obvious: Bezos’s net worth currently stands at approximately $120 billion, while Ambani’s is around $84 billion. In short, both of them bring essentially unlimited resources to the streaming game, free to subsidize anything they believe is in their companies’ long-term interests. The stakes in streaming have never been as high and only the deepest-pocketed need apply.

The two initiatives in India are a preview of streaming’s future. As I said, DEFCON 1.

Pack your bags for the trip to India, and listen to the podcast to learn more (27 minutes, 20 seconds)



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Welcome to this week’s edition of Inside the Stream, the podcast where nScreenMedia’s Chief Analyst Colin Dixon and I take listeners inside the world of streaming video.

At NBCUniversal’s One22 developer conference this week, ShoppableTV was one of the innovative ad experiences showcased. ShoppableTV allows viewers to buy products while they’re watching TV. In this week’s podcast Colin and I discuss ShoppableTV’s opportunity and what the potential challenges are.

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Yesterday’s partnership announcement between Roku and Shopify brings CTV advertising another step closer to realizing its ultimate potential as a full-funnel channel for advertisers. Loyal VideoNuze readers know that I have been advocating for CTV advertising to become full-funnel for a while now (see “How CTV Advertising Can Drive Super Bowl Ads Above $10 Million Per Spot,” “Behold, YouTube,” “The CTV Advertising Flywheel is Here, and It’s Only Going to Accelerate,” and “Connected TV’s Big Opportunity at the Bottom of the Funnel.”).

CTV advertising is of course surging these days, with eMarketer forecasting CTV ads in the U.S. alone will more than double to over $27 billion in 2021. CTV ads are benefiting from proliferating adoption of CTV devices, many new streaming services creating compelling content for audiences, cord-cutting, and massive changes in viewers’ behaviors. Still, when I talk to industry executives, there’s broad consensus that today CTV ad spending is coming mostly from the shift in spending from linear TV to CTV as advertisers seek to maintain their reach and frequency goals. In other words, CTV is mainly a “follow the eyeballs” strategy.

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Welcome to this week’s edition of Inside the Stream, the podcast where nScreenMedia’s Chief Analyst Colin Dixon and I take listeners inside the world of streaming video.

Earlier this week the FandangoNow and Vudu movie and TV VOD (“TVOD”) rental sites merged. Colin notes that the move didn’t register on many industry executives’ radar (certainly nowhere near the biggest deal of the week, Blackstone’s acquisition of a majority of Hello Sunshine for $900 million). The tiny ripple FandangoNow-Vudu caused isn’t surprising given the sub 5% market share the two sites jointly have.

The far bigger story here, which we explore on this week’s podcast, is the tremendous shift in consumer preferences from buying and/or renting movies/TV shows via TVOD sites, to renting access through SVOD services. Indeed, Colin cites data that the market for buying/renting has collapsed by 50% over the past 6 years. Meantime SVOD has skyrocketed. Simply put, SVOD has crushed TVOD.

Note this shift isn’t just confined to video. The late Steve Jobs long insisted that consumers wanted to own, not rent, their music, going so far as to say in his famous 2003 Rolling Stone interview “I think you could make available the Second Coming in a subscription model, and it might not be successful.” Sorry Steve….in its Q2 earnings report, Spotify alone said it had 365 million monthly active users at the end of Q2, with 165 million of them paying a monthly subscription fee. Apple Music likely has MORE subscribers than that, and the services business is Apple’s most important growth segment. Then there’s YouTube, Amazon and many others.

Sometimes even the greats get things terribly wrong.

Be that as it may, Colin and I explore what all of this means to the future of the purchase/rental model and SVOD. Lurking in the wings as another disruptor is AVOD. As Colin notes, Q2 advertising at Tubi, Pluto and Roku was once again off the charts. As the Hello Sunshine team would surely attest, consumer preferences in video are far from settled.

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Content being used to drive consumer purchases isn’t a new idea, but streaming is breathing renewed interest, with a variety of different strategies and implementations. A number of interviews and articles illustrating the trend have recently caught my attention.

Given its commerce, content and technology capabilities, Amazon is primed (pun intended) to be a major player. In an interview at IAB’s Annual Leadership Meeting a couple of weeks ago, Amazon Studios’ COO and Co-Head of Television Albert Cheng talked at length about how the company is using its Prime Video app on certain connected devices, along with its “X-ray” feature, to enable seamless viewer transactions. Albert highlighted successes the company has had with Rihanna’s “Savage x Fenty,” Heidi Klum and Tim Gunn’s “Making the Cut” and NFL Thursday Night Football.

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Last week Reuters reported data from internal Amazon documents that for the first time provided insights into viewership of the company’s original TV programs and their contribution to creating new Prime subscriptions. Below I’ve done some additonal math using separately reported information to calculate how profitable at least one of Amazon's original programs could be.

Last October, Fortune reported research from Consumer Intelligence Research Partners indicating that Amazon Prime subscribers spend an average of $1,300 per year compared to an average of $700 per year that non-Prime subscribers spend. (Note, back in Fall, 2016, Morgan Stanley said that according to its survey, Prime subscribers spend nearly $2,500 per year, vs. $544 for non-subscribers). For the purpose of my calculations, I just used the CIRP estimate of $600 incremental spending per year by subscribers.

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In 2017 Amazon continued launching into new businesses as it leveraged its massive scale and resources to disrupt the status quo. As we look ahead to 2018, online video adverting appears to be yet another juicy opportunity for Amazon to pursue, as all the pieces seem to be falling into place.

As background, Amazon is already investing heavily in ad tech and ad sales staff. Of course, ads and recommendations have long been a part of the Amazon shopping experience, with text and banner ads popping up following searches and on product pages. But video ads give the company a whole new opportunity.

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You would have to have had your head buried in the sand these past few months not to notice that Amazon has become the “it” company everybody can’t stop talking about. Whether buying Whole Foods, innovating its Echo smart speakers, challenging Blue Apron in meal kits, introducing its own Geek Squad to compete with Best Buy or countless other initiatives, all of a sudden Amazon seems to be omnipresent. And with an estimated 80 million Prime members, Amazon is in fact now literally present in many people’s day-to-day lives.  

Amazon has what it calls “pillars” (Prime, e-commerce, cloud, etc.), and it’s becoming clearer by the quarter that video is fast becoming another one. In video, the company’s efforts are wide-ranging - devices (Fire TV), original content (which is included in Prime and on which it is spending billions), licensed content (also in Prime), live sports (with its NFL Thursday night deal), SVOD distribution (via its Amazon Channels program for 3rd party and original services), digital video premieres (with its Amazon Video Direct program), international (expanding its own SVOD service to 200+ countries) and technology enablement (with AWS and acquisitions like Elemental). In sum, Amazon is already operating in virtually every part of the video value chain.

Despite all of this, I believe that Amazon’s video efforts are still completely under-appreciated. With a number of industry trends coming into view, Amazon’s video momentum could significantly increase and carry it straight into the heart of the pay-TV industry.

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An article in the WSJ over the weekend “Apple’s iTunes Falls Short in Battle for Video Viewers” caught my attention for a number of reasons, not least of which it touched on how quickly Comcast has succeeded in growing its market share in digital movie rentals and downloads.

While iTunes is estimated to still hold the market share lead in the digital movie rental and purchase industry with a share of between 20% to 35%, that’s down from over 50% in 2012. The article notes that Amazon’s share is now up to around 20% and Comcast’s is at 15%. For Amazon, video rentals and purchases represent another way it leverages its e-commerce expertise. Rentals/purchases are also very complementary to Amazon’s Prime Video service. In many ways, there’s nothing surprising at all about how Amazon has taken a bite out of Apple’s market share.

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I’m pleased to present the 365th edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

First, we’d like to thank our podcast sponsor Akamai Technologies, which will show its Media Acceleration capabilities and range of cloud-based solutions at the NABShow in Las Vegas, in booth SL3324. Click here to schedule a meeting.

On this week’s podcast, Colin and I discuss Amazon’s burgeoning role in video and how Amazon Prime’s unique model gives the company unprecedented advantages. Prime’s power was on full display earlier this week when Amazon nabbed the rights to the NFL’s Thursday Night Football package for $50 million, 5 times more than what Twitter paid last season.

Colin and I agree that Amazon’s ability to view video investments as drivers for Prime membership retention/acquisition and ultimately increased commerce is a huge threat to everyone in the industry. Colin shares research on how the world is starting to wake up to this, though we believe that Amazon’s video potential is nowhere close to being fully appreciated yet.

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Amazon further reinforced its position as the most influential company in the video industry with news late yesterday that it had won the rights to stream the NFL’s 10 game Thursday night football package for $50 million, with plans to make the games available for Amazon Prime members only (they'll still be broadcast alternatively on CBS and NBC, and on NFL Network). The sum is a whopping 5 times more than the $10 million that Twitter reportedly paid for the same rights last season.

The key to understanding Amazon’s willingness to pay up for the TNF rights is the power of its unique business model, based on Prime. As I wrote last November, Prime is the linchpin for Amazon’s ever-expanding video initiatives.

At last summer’s Recode conference, Amazon CEO and founder Jeff Bezos plainly articulated Prime’s value to the company in driving greater customer loyalty and increased purchases (if you’re a Prime customer, you no doubt know this dynamic yourself). And keep in mind, with approximately 60 million members paying $99 per year, Prime generates $6 billion in revenue for Amazon before a single purchase has been made.

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Recode reported a couple days ago that Apple is potentially looking to sell online subscriptions to HBO, Showtime and Starz in a single bundle to subscribers. Since Apple has made so little progress in video compared to its peers, a bundling move like this could give it a boost. But if I were handicapping which company is much more likely to sell HBO, Showtime and Starz in a discounted bundle - and succeed with it - I’d put my money on Amazon far sooner than Apple.

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Brands, publishers and celebrities are all experimenting with Facebook Live, to see how live-streaming can help them connect with their target audiences. One interesting example that hit my radar is Lowe’s home improvement stores, which, this past Saturday night, used Facebook Live to broadcast a 45-minute show featuring HGTV’s “Property Brothers” to reveal a sample of Black Friday sale items.

In the video, Drew and Jonathan Scott open a series of boxes which often contain gentle pranks (e.g. a marching band, confetti, puppies, etc.) as well as actual products that will be on Black Friday sales (e.g. wine chiller, combination tool kit, Roomba vacuum cleaner, etc.). For much of the video, the brothers are ad-libbing, casually jibing each other and keeping the show moving along.

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Here’s an eye-opening data point: according to new research from Brightcove, 46% of respondents said they made a purchase as a result of watching a branded video on social media (with 53% of U.S. respondents doing so). And another 32% of respondents said they considered doing so. The data shows the increasing importance of social media as an influential platform for marketers and the power of branded videos - as opposed to conventional 15 or 30-second ads - as a key purchase motivator.

With marketers increasingly concerned about ROI on their spending and consequently shifting dollars into digital media, the research only magnifies the challenge TV networks face in retaining advertisers’ allegiance.

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What’s a viewer’s willingness to pay in order to have an ad-free video experience? The question is in focus yet again with yesterday’s announcement of YouTube Red, the company’s long-rumored $9.99/month ad-free service. Unfortunately for YouTube Red, in its case, willingness to pay is going to be heavily influenced by the fact that YouTube has arguably the most viewer (and advertiser) friendly video ad model, which will undoubtedly impact interest in paying for YouTube Red.

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I'm pleased to present the 291st edition of the VideoNuze podcast with my weekly partner Colin Dixon of nScreenMedia.

Video is emerging as a top priority for Amazon and its varied investments appear to be paying off as it builds an ecosystem to compete with Apple. On this week’s podcast Colin and I dig into the key device and content announcements Amazon has made recently (see also my post from earlier this week) and why they’re important.

Amazon has clearly concluded that video is a successful driver for its Prime service, which is one of the company’s most important consumer-facing priorities. Colin notes that research released from Digitalsmiths earlier this week showed that Amazon Prime video is now used by over 20% of U.S. households, up from 7.5% 2 years ago (by comparison Netflix increased from 28% to 49.4% and Hulu increased from 6.3% to 11.8%).

Colin and I expect a lot more video-related investments by Amazon as it leverages its deep pockets and multiple lines of business to change the rules of the game in OTT.

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Startup VHX has unveiled a turnkey SVOD platform with no upfront cost, no exclusivity and full branding/pricing/packaging control by content providers. The platform is intended both for both premium content providers and online original creators (e.g. YouTubers) seeking to diversify from free, ad-supported only models.

Jamie Wilkinson, co-founder and CEO of VHX sees the SVOD platform as allowing content providers to easily "roll their own" Netflix or HBO Now service. He distinguishes VHX's approach because the content provider is in control and retains all viewer data. Unlike a storefront like iTunes or Amazon, VHX's platform is meant for content providers that want to set up branded video businesses online, rather than just sell their content through third-party outlets.

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Digital purchases of movies in the U.S. boomed in 2014, to $1.55 billion, up 30% from $1.19 billion in 2013, according to new data from the Digital Entertainment Group. However, the $360 million increase was more than offset by a decline in purchases of physical movies (DVD and Blu-ray) of $844 million in 2014, to $6.93 billion, an 11% drop. In fact, as the chart below shows, physical sales have declined by over $2 billion since 2011 when they were nearly $9 billion. 

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