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Amazon Prime Video's Global Launch Looks Soft, but It's Just a First Step

Image: Amazon Prime Video's Global Launch Looks Soft, but It's Just a First Step

(Getty/Leon Neal)

Tuesday, 27 Dec 2016 09:18 AM

Amazon's sudden recent rollout of its Prime Video service in more than 200 territories, in tandem with the global availability of its new series "The Grand Tour," clearly announced the company's intention to take on Netflix as ruler of the video-streaming world.

Yet what's equally clear is that Amazon has some way to go in terms of tailoring Prime to local tastes and maximizing its appeal. Indeed, in some ways, the Dec. 14 global rollout almost seemed like a soft launch.

In several countries looked at by Variety, the company hasn't even bothered to translate the PrimeVideo.com website's interface from English into the local language. And its content offerings seem scant and lacking in local flavor.

In the United Arab Emirates, for example, the new streaming service offers original shows produced by Amazon Studios, including "Transparent" and "The Man in the High Castle," plus a few other licensed series like "Seinfeld" and "Community." But none of the available movies is in Arabic; most don't even have Arabic subtitles. Many of the films are also available through Netflix as well as through Amazon.

Similarly, in Spain, Amazon is currently offering a mix of its original series and some recent studio movies, plus a Manga section, sprinkled with some licensed shows like AMC's "Fear the Walking Dead," which has already been successful for Amazon in the U.K.

Amazon's strategy appears to be a two-step process: first establish a global footprint, then go back and build out more tailored platforms in key new markets with better-curated and more local-language content, similar to what the company has already done in the U.S., the U.K., Germany, Austria, and Japan. In India, they set up a local operation prior to their Dec. 14 launch there. (Smaller territories will probably continue to have just a generalized global service, not a custom-made one.)

"We are just getting started. It's still day one for us," Roy Price, Vice President, Amazon Prime Video and Amazon Studio, wrote in emailed comments to Variety.

"Like everything we do at Amazon, we are focused on continuously improving the customer experience, including adding content and localizing features over time," Price said, noting that Prime will be adding new Amazon originals as well as licenced and localized programming in the future.

To do this, Amazon will likely start cutting larger acquisition deals with prominent local players, including leading broadcasters. That would allow it to license local shows for other territories; the British comedies "Catastrophe" and "Fleabag," for example, have had considerable success in the U.S.

Eventually, Amazon could begin commissioning more original series around the world. It has already co-produced Paris-set haute couture drama "The Collection" (pictured) with France's Federation Entertainment and public TV France Televisions, and in February it greenlit its first original German-language TV series, "Wanted," from German actor-writer-director Matthias Schweighoefer, to be produced by Schweighoefer's Pantaleon Entertainment, Warner Bros. Entertainment, and Warner Bros. International Television Production Deutschland. Amazon is also co-producing Jez Butterworth's "Britannia," an original program starring Kelly Reilly, with European pay-TV company Sky.

Significantly, in October, Amazon appointed head of drama Morgan Wandell to the new post of head of international productions.

"The indications we have received from them in our talks is that they are open to hear all kinds of pitches and projects," said Marco Chimenz, CEO of Italy's Cattleya production shingle, which is currently producing the first Netflix original in Italy, mob show "Suburra."

Chimenz, who also serves as president of the European Producers Club, said that Amazon is "not particularly interested in addressing a specific segment of that audience, so they are open to everything. The only indication we received from them is: 'We want to do ambitious things.'"

Amazon's competition with Netflix, which itself launched in 130 new territories in January 2016 after having established a prior presence in more than 50 countries, will be interesting to watch.

A report by IHS Technology, following Amazon's unveiling of Prime Video, cited Netflix as a prime example of the fact that "services without localization have struggled to achieve the same level of success as more territory-specific offerings." Ampere Analysis recently estimated that only 9% of Netflix's catalogue in Germany was local content and roughly 5% in the U.K. Amazon's figures are even lower: 4% in Germany and 2% in the U.K.

To improve both its U.S. and local offerings, Netflix has spent $1.2 billion on original programming in 2016, the IHS report noted. Amazon still lags far behind, even though it nearly doubled its investment in original content from $176 million in 2015 to an estimated $337 million this year. That could increase further once Prime Video gets some global traction.

Cost of service is likely to help Prime Video's penetration. For most territories, the price - at least initially - is $2.99 per month, less than half the cost of Netflix.

In the major markets of France, India, Italy, and Spain, video access now comes with membership of retail delivery service Amazon Prime, just as it does in the U.S., the U.K., and Germany. That bundling should boost its appeal to new customers. But it also means that, at a stroke, Amazon probably already has more passive subscribers to its video service in France (more than 2 million) through their current Amazon Prime memberships than Netflix has been able to sign up in that country so far.

In Germany, Amazon Prime also boasts more subscribers than Netflix - about 5.2 million versus 2.4 million, according to Ampere Analysis. The numbers are reversed in Britain, where Netflix has an estimated 6 million clients and Amazon Prime 2.3 million.

Globally, Netflix is not expected to lose its pole position anytime soon. IHS predicts that Amazon Prime Video will have 64 million active users by the end of 2020. Netflix currently has an estimated 86.7 million subscribers.

As for agreements that Amazon has already struck in Europe, in France it has a volume deal in place with pan-European studio Studiocanal and is in talks for other library pacts with several companies, including Fox, sources say. Amazon is also said to be looking to hire acquisition execs in Spain and France, territories where local content is a crucial subscriptions driver.

One open question is whether Amazon sees Prime Video as a merely a ploy to boost retail sales around the world, or instead has plans for it to become a standalone profit-making enterprise.

"It's not clear if they want it to remain a loss leader, something that makes you buy other things from Amazon, or if they want this to become a profit center," said Francois Godard at Enders Analysis.

But he noted that Amazon, which is already the biggest video retailer in the world dealing in VOD and electronic sell-through rights, now has the muscle to go to Hollywood studios and say: "We can buy [global] rights to any window apart from theatrical."

"Having a global Prime Video offering is certainly beneficial in these types of conversations," Price commented.

That would challenge the current, lucrative model of selling TV rights territory by territory in Europe.

 

© 2017 Thomson/Reuters. All rights reserved.

 
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Amazon's sudden recent rollout of its Prime Video service in more than 200 territories, in tandem with the global availability of its new series "The Grand Tour," clearly announced the company's intention to take on Netflix as ruler of the video-streaming world.
amazon, prime, video, streaming
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2016-18-27
Tuesday, 27 Dec 2016 09:18 AM
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