A short YouTube explainer (uploaded Jan 29, 2015) describing Amazon's strategy of bundling streaming media with its Amazon Prime retail membership. The speaker outlines Prime’s $99 annual fee and perks (free two-day delivery), explains how limited "free" streaming of movies, TV shows and music is bundled into membership to drive repeat shopping and cross-sales, and notes Amazon’s move into producing exclusive original content (including signing Woody Allen) as part of a broader push to reshape retail and the entertainment industry.
Questions this video answers
$99 per year
January 29, 2015
Woody Allen
Chapters
How many of you have used Amazon.com in the past? Many Internet users have shopped on Amazon's E commerce platform, which I'm sure you agree with me, has a huge catalog of stuff. Like most retailers, Amazon makes money on the margins of its product sales. It even created the Amazon prime membership for regular shoppers, which essentially gives you perks like free to day deliveries for a flat fee of $99 a year. Amazon.com first offered physical books and then it added everything possibly saleable online. In the past years, online content has been integrated to its catalog. Amazon has paid content producers to get license rights and has made hyped shows and movies available on Amazon.com this content generates additional income for Amazon. The next step for Amazon was to bundle its online content offering with its Amazon prime membership, which essentially means that anyone who pays the $99 fee can get free and limited streaming of movies, of TV shows and of music via pram. So how does giving away instant videos for free likely make sense for Amazon? Maybe some prime subscribers only stream on Amazon.com maybe they don't spend more than the $99 fee. But Amazon is bidding on other subscribers that are engaged and are likely to come back to take advantage of perks like free 2 days when shopping on Amazon.com eventually. This bundle is probably driving overall sales on the platform. Now Amazon is taking things at the next level by producing its own content. It has been pursuing top talent and has even signed Woody Allen for a TV series. It's not really clear whether Amazon is producing its own content to reduce overall content related cost or if its ambitions are to offer exclusive content to drive a larger portion of the market to Amazon. Maybe it's both, we don't know. But what is certain is that Amazon is pushing the entertainment industry to new frontiers and it's redefining what retailing is in the online age.
