Amazon recently launched a new streaming video service, Amazon Video Direct, which has been reported as being in competition with Google’s YouTube for video-ad dollars and views. Amazon considers itself to be the world’s biggest store. YouTube is considered to be the world’s largest video database and sharing site. Amazon already offers streaming movies and television programs to any device with an Internet connection. This new product is expected to give Amazon customers additional viewing options without the upfront fee. Many of the videos will be paid according to how well their content performs. Competing online streaming video services have driven up the cost of this type of advertising platform.
Amazon’s pitch to video creators, to help pull them from YouTube and other posting sites, is that they can now have exposure to the millions of monthly online shoppers with the flexibility to select several different paths for making money. Furthermore, the company is trying to make it easier for content creators to reach an audience while that same audience finds excellent content.
Amazon Direct Video
Amazon Direct Video is an infrastructure that allows individuals to make videos and upload them to the platform. Amazon give video creators four option for making the videos available to customers including:
1) Free to any views with ads that are sold by Amazon in exchange for 45-percent of the sale (this is the YouTube model)
2) Viewers can digitally purchase or rent which will yield 50-percent of the money to Amazon
3) Videos can be made available to those who pay for an add-on subscription which is available through the Streaming Partners Program
4) Videos can be exclusively available to Prime subscribers allowing creators to earn 15-cents per hour streamed.
Of course the first option directly competes with YouTube because it is their exact model. In this instance, YouTube has an enormous head start and there is no way Amazon can compete with them on price. The second and third options are interesting but seem to be applicable to major media brands and not the small online startup company with a limited budget.
The fourth option is disruptive in that it gives people the ability to enter into the premium video content marketplace. At the moment, anyone can make an ad-free television show but must do it by speaking with executives at HBO, Showtime or Netflix and convince them to pay you. Amazon is saying that anyone who wishes can make a show with a guarantee that if it becomes popular, they will get paid.
With Prime Video option-only, Amazon will be launching the Amazon Video Direct Stars program which will be a bonus payout of $1 million per month to reward the top-performing video creators and provide them with an incentive to add content to the Prime Video option. This monthly bonus will be paid out based on the Top 100 Amazon Video Direct titles from within the Prime Video option alongside amount of revenue earned. Video creators are eligible for the fund once they start streaming content on June 1st.
The following companies have agreed to launch videos with Amazon Video Direct once released to the public for viewing:
- Conde Nast Entertainment
- Kin Community
- CJ Entertainment America
- Business Insider
- TYT Network
- Baby Einstein
- Pro Guitar Lessons
- Journeyman Pictures
- Kino Nation
- Synergetic Distribution
- Xive TV
- Samuel Goldwyn Films
- The Guardian
Can Amazon Video Direct Compete with YouTube?
YouTube has a decade-long head start in the video streaming arena with advertising beginning in March 2006. However, the advertising spectrum skyrocketed when Google purchased the company and fully integrated Google Adsense into the mix. At the moment, there has been 819 million hours of videos on YouTube since the company has been live. With an average video length of 10 minutes, there are almost 82 million videos currently on YouTube. Of course this number continues to grow at a rapid pace as society becomes more creative.
With that being said, Amazon certainly as a difficult struggle ahead of them to catch-up to YouTube. The first three video advertising models can never compete with YouTube as Amazon is too much of a late-comer into the industry to directly compete. Where Amazon can actually start to pull users from posting on YouTube is the fourth option, access to premium subscribers with the opportunity to grow and make more additional money in the process.
This is a unique business model that has not be implemented into the world of video streaming yet. The primary benefit that Amazon has which will considerably help them is the millions of monthly shoppers and Amazon Prime members who will certainly use this service. Prime members will receive high quality video content and video creators will be able to connect with them to get paid. The bonus pay of $1 million per month for being the top video creator is really lucrative, especially for startups or average Joes who could really use that money.
Therefore, yes, Amazon Video Direct can compete with YouTube on some level. Amazon will never reach the amount of content that YouTube has but with such a diehard fan base already in place, they have a running start. One of the best aspects of Amazon is that as their shopping business continues to grow and reach new customers around the world through physical expansion, this will also have a positive impact on their video service. Also, Amazon continues to develop an all-inclusive, one stop shop service which will know offer digital video advertising products.
Amazon and YouTube are both giants in their particular industries. Therefore, with Amazon stepping across the traditional boundaries of physical and digital products, it will be interesting to see how YouTube responds to this direct threat. They may need to beef up their advertising options to the consumers to better compete with Amazon.
In summary, Amazon is certainly a threat to YouTube and is expected to gain market share and viewers from their service. YouTube must find a way to retain those video creators with some type of creative video advertising option.