Amazon’s rumored development of an ad-supported video-streaming service was resurrected Friday when the New York Post reported the ecommerce company’s launch of a “Netflix killer” is, indeed, nigh.
Although Amazon says it often experiments with new offers and experiences for customers, it has not announced plans for an ad-supported video-streaming service.
According to The Post’s sources, the service would be sold apart from Amazon Prime membership, which gives members access to “thousands” of free movies and TV shows on Fire TV, tablets and phones in addition to iOS devices and set-top boxes. Many have speculated that Amazon will roll out an ad-supported streaming option for video die hards who don’t necessarily want the whole bag of perks associated with a Prime membership.
Amazon already offers free first episodes of select Prime Instant Video TV shows accompanied with ads via the applicably named “First Episode Free” feature (Geico has sponsored pre-roll in this instance), and there are display ads, which run on shorter game and movie trailers.
As Amazon inches closer to ad-supported streaming, some video players are going the other way. Three weeks ago YouTube CEO Susan Wocjicki revealed at the Code/Mobile conference (video) that YouTube is considering an ad-free, subscription offering.
Then Sony and CBS last week unveiled plans for an Internet-based TV service dubbed “PlayStation Vue,” which has network licensing deals in place already with NBCUniversal, Discovery Communications, CBS and Viacom. Although the service will be free for PS3 and PS4 users for a limited time upon launch in early 2015 (there are 35 million IP-enabled consoles nationwide), some reports say Sony is considering set subscriptions at $60 a month with plans to eventually expand service compatibilities to Apple devices like iPad.
Although it’s too early to determine whether Sony (or Amazon, for that matter) will adopt a freemium model with the option to upgrade to a paid subscription for more premium access (or perhaps less ads), Hulu’s founding CEO Jason Kilar has committed to that approach with the launch of new online video service “Vessel,” which will run ads both in free and paid tiers.
Advertisers and agencies are chomping at the bit to reach connected audiences who’ve cut the cord with traditional cable.
“If it’s all IP-served, it’s all addressable,” said Tracey Sheppach, EVP and head of Precision Video at Starcom MediaVest recently at an Advanced Ads summit at New York City TV Week. “I’m interested in buying quality audiences around premium content. If that’s what Sony is offering, that’s what I want to buy.”
But, as Starcom’s Sheppach points out, the agency’s role is to cut through the clutter of growing inventory “because we’re aggregating now from all of these disparate sources.”
New devices and streaming options mean new addressable opportunities for advertisers, but reaching critical mass on each service or device is necessary to attract greater investment. So is measurability, which spurred Nielsen to test panel-based measurement for Amazon and Netflix as an impetus to help “quantify” the streaming-video space, as first reported by the Wall Street Journal.
The challenge is, while providers like Apple TV may have 20 million devices in market, determining household uniques is important for marketers and app developers, argued Dan Rayburn, a principal analyst at technology research firm Frost & Sullivan and EVP of StreamingMedia.com.
“How many ‘uniques’ does Apple TV reach?” he added. “My guess is around 10 million.”
There are even more questions about Amazon’s rumored streaming-video service.
“This is speculation only, but (I want to know) who are they targeting, how much content is available and will it be like Hulu and focus on TV or more like Netflix and focus on TV and movies?” he added. “What devices will it be available on? If it’s ad-supported, that could take away from Prime. There are too many unknowns.”
