Amazon is definitely open to partnerships with pay-TV providers, according to Amazon Video Managing Director Alex Green. Speaking at the Cable Congress event in Brussels yesterday, Green said that the company has been largely focused on improving end-user quality of experience (QoE) and developing its own devices, such as the Amazon Fire stick, rather than pursuing distribution agreements.
Green acknowledged that Amazon had not been as active in this regard as its primary OTT video competitor, Netflix, but said he is talking to operators as well. He pointed to Amazon's partnerships with a large number of device manufacturers as evidence of the company's willingness to partner, as well as the Amazon Prime Video Channels initiative, which now extends to more than 100 different video content providers.
He also challenged the assumption that OTT providers are a direct threat to pay-TV operators, arguing that OTT services such as Amazon "easily co-exist" with pay-TV services. He feels that OTT is helping grow the total market for video services, making it more complementary than competitive.
This largely echoed Netflix CEO Reed Hastings' comments at the Mobile World Congress last week, where he repeatedly described Netflix as a "content company" and emphasized that it is one of many content options for consumers. The emphasis on content development as a goal, rather than delivery of video services to consumers, was noticeable -- at least to me. (See We'll Make Buffering Obsolete, Like Dial-Up: Netflix CEO.)
At the same time, Green believes that the traditional structure of the industry is undergoing significant change. The idea of first having a linear channel and then adding VoD content to complement it is becoming outdated. Instead, he said, it is about understanding how best to deliver the content you have to your audience -- a variation of the "platform is king" argument often heard at industry events today. (See Rambles & Rants: Who Rules Video?)
He sees that taking hold in the future -- with consumers becoming less engaged with their providers and access methods, and instead just selecting what they want to watch, whenever, wherever and however want to watch it.
Green's newfound emphasis on pay-TV partnerships is not surprising, in fact, what is surprising is that Amazon has not pursued these partnerships with more vigor to date. But it seems to be happening now: Liberty Global Central Europe CEO Eric Tveter said earlier at the same event that it is evaluating a deal with Amazon, so there's evidence that the company is now pursuing partnerships.
Given Amazon's approach to the market, it makes sense. Unlike other "pure" OTT providers Amazon.com Inc. (Nasdaq: AMZN)'s video service is only a part of its strategy; instead its goal is to get more Prime subscribers signed up as they generate more revenue on the e-commerce side of Amazon's business. So the wider the net it casts, the better the returns -- and not just on video. (See Amazon Strategy Highlights Arms Race for Original Content.)
Secondly, I do believe that Amazon wants to become an aggregator of OTT services in the long run -- which, contrary to Green's comments, would make it a direct threat to pay-TV operators, at least to the extent that both parties have the same ambition. Amazon's relationship with Home Box Office Inc. (HBO) is a prime (no pun intended) example of that. (See Growth of Netflix Competitors Could be Positive for Pay-TV Providers and HBO on Amazon: First Step in OTT Aggregation?)
But in the strange world we live in, partnering with pay-TV providers might actually help that cause, since it offers even pay-TV subscribers a path to signing up for those aggregated services via Amazon.
Despite its scale and extensive web development expertise, Amazon's video service has definitely developed more slowly than Netflix Inc. (Nasdaq: NFLX)'s -- perhaps because its goals are different, or because it is less dependent on rapid growth. For now at least, the goal seems to be to work with everybody: device manufacturers and platforms for delivery of its service; content providers for its Amazon Channels initiative; and now pay-TV providers, to integrate Amazon Prime into pay-TV offerings.
— Aditya Kishore, Practice Leader, Video Transformation, Telco Transformation