Video services

Why Amazon May Be Cable's Biggest Threat

Amazon Prime Video may be best known for its British TV series and costume drama lineup. I should know. I've watched Downton Abbey, Grantchester and more. But the current catalog doesn't mean Amazon wants to remain a niche viewing service forever, however it might define that category of content.

As evidence, Amazon.com Inc. (Nasdaq: AMZN)'s head of Prime video content recently told Variety that CEO Jeff Bezos wants to own a series as popular as Game of Thrones. And he's willing to pay to make it happen. According to analysts, Amazon is investing $4.5 billion in content this year. That's less than Netflix Inc. (Nasdaq: NFLX), but more than Home Box Office Inc. (HBO) , and it should be enough to make cable companies worry.

Amazon doesn't just have money, however. It also has unparalleled reach across the consumer landscape. The company can cross-market, cross-promote and cross-sell video services in a thousand different ways, and it's that consumer reach combined with the company's cash that's a major competitive advantage.

Consider this. Amazon is already handing out free access to video with the purchase of a Prime membership, and the approach has netted it an audience of around 79 million customers. But Amazon doesn't have to stop there. The company just bought Whole Foods. It could build content rewards into its food shopping loyalty program. It could take advantage of your buying habits online to recommend new shows it thinks you should be watching. It could use the TV shows you watch to recommend other products to buy within the Amazon ecosystem. The possibilities are endless.

Cable companies know this. At the Liberty Global Tech Summit recently, Broadband TV News reports that Liberty Global Inc. (Nasdaq: LBTY) CEO Mike Fries expressed concern about Amazon giving away content that's core to cable companies' business. What he didn't articulate, however, is that while it's hard to compete with free, it's also hard to compete when your rival has unprecedented ways of making money off the same product you sell.

Traditional pay-TV providers can bundle video services with broadband, and that's a big deal. But Amazon can bundle video services with almost anything else. (See also Boom! Hulu Just Blew Up the TV Bundle.)

There is growing chatter in the press about Amazon's market power and whether it should be treated as a monopoly. Should the government place restrictions on it? Should the retail powerhouse be broken up?

I don't know, but certainly there are many companies in many sectors that see Amazon as a credible threat to their survival. There's no reason to think the cable industry is immune.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

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stevensdavid 10/1/2017 | 8:53:59 PM
Re: Apple TV and Amazon.. Because Apple does not currently offer a subscription video on demand or pay-TV product, it can only use control of the content engine to boost purchases and rentals via iTunes on the Apple TV. That is somewhat different from Amazon, which can use its Prime program to more than double customer purchases on the website and which therefore considers Prime integral to its business model.
KBode 9/26/2017 | 4:03:37 PM
Re: Soccer rights That's a little more difficult in telecom and cable, where many of its competitors literally write state law. For example you'd be hard pressed to find the current FCC stand up to AT&T on any issue of substance, but it's fashionable among these same telcos to demonize edge providers leaving them open to anti-competitive abuses by incumbents (see net neutrality). 
Phil_Britt 9/25/2017 | 8:01:02 PM
Re: Soccer rights If Amazon wants it bad enough, it has the financial wherewithal to crush competitors by undercutting the market, as it has in other businesses.
brooks7 9/25/2017 | 4:28:13 PM
Re: Soccer rights @psorksy,


Where I was headed was that Amazon - being available globally - would mean that any exclisive deal would essentially kill every one else globally.  So not only your terrible twosome but also anyone else who has rights.




Michelle 9/25/2017 | 2:34:22 PM
Re: Soccer rights heh, I saw that meme on twitter too. 

Did you happen to read about Amazon's path and the rise of Sears?

psorsky 9/25/2017 | 1:05:16 PM
Re: Soccer rights Sorry...guilty of expressing a view from the country in which I reside - UK - where the Premier League rights are only held by two bidders, Sky and BT. Amazon et al will break that cosy twosome.
brooks7 9/25/2017 | 11:33:22 AM
Re: Soccer rights @psorsky,

But see its not a duopoly. It might be a duopoly in the UK, but in the US the Premier League is shown on NBC (and various sports channels of NBC).  That is why an exclusive can not work.  By the way Fox Sports shows the Bundesliga and (sigh) MLS.





psorsky 9/25/2017 | 4:45:49 AM
Re: Soccer rights Agree - but they will break the duoploy of Sky and BT in the UK market.
psorsky 9/25/2017 | 4:44:53 AM
Re: Soccer rights In a perfect comunist world - you buy everything you need from the state.  In a perfect capatalist world - you buy everything you need from Amazon!

brooks7 9/24/2017 | 10:29:45 PM
Re: Soccer rights I don't think they will get exclusive.  Means that the league can not give it to anyone else in the world essentially.  That is extraordinarily bad for revenue.

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