Amazon has launched Amazon Channels, an offering of subscription channels and apps available to Amazon Prime customers, in the UK and Germany. Today's launch is the first time the service has been made available outside the US.
For monthly fees ranging from £1.99-£9.99 ($2.58-$12.96) in the UK and €1.99-€7.99 ($2.24-$10.11) in Germany, Amazon Prime members will be able to add offerings from providers including Discovery Channel, Eurosport, NBC Universal and ITV to their subscriptions. The add-on services will use the same account, login and user experience. Subscribers will be able to cancel at any time and according to Amazon, 'the majority' of content will be available for download.
The initial offering is made up of 41 services in the UK and 21 in Germany. Some - film services MGM, MUBI, Studio Universal Classics and sports channel Motorvision - are available in both countries. Other genres covered include children's, lifestyle, documentaries, entertainment, horror and fitness.
The online retail giant launched Amazon Channels (then known as Amazon Streaming Partners) in the US in December 2015. Partners included Showtime and Starz and more niche services like Acorn TV, Tribeca Shortlist and Curiosity Stream. HBO and Cinemax were added a year later.
Amazon has offered its subscription video service worldwide since December last year. The UK and Germany are its main international markets, with the Prime Video customer base estimated by IHS Markit at 3.1 million in the UK and 3.5 million in Germany. The roll-out of Amazon Channels is a significant next step into the arena of paid video content, coming on top of the company's increasing investment in original TV and film content and the offer of library video content on subscription and pay-per-view.
While the best way to describe Amazon Channels is as a 'pay TV lite' service offering subscription content on a la carte, unbundled basis, it is hard to see the service as an alternative to the Sky packages available in Germany and UK and cable offerings like Virgin Media and Kabel Deutschland. For one, Amazon Channels lacks the premium sports and first-run movies which form the bedrock of classic pay TV packages, and furthermore the channels are non-exclusive.
By bundling channels together, pay TV operators can offer consumers a wide range of services at a low cost per channel, offering the providers a cut of subscription fees. The pricing of Amazon Channels does not offer a strong incentive for customers to build their own bundle given that no discounts are available; a selection of channels equivalent to a basic pay TV package will cost more than £30 on top of Prime fees. Furthermore, as they are niche services already available direct to subscribers, it could be assumed that obsessive fans of Nascar, for example, would already have a Motorvision subscription while parents of preschool children could have signed up for Hopster.
The number of customers who would give up their pay TV subscription for Amazon Channels is, therefore, small. Sky recently said that only 2% of its Sky subscriber base had churned from its pay TV service in favour of its over-the-top option Now TV (which offers access to all of Sky's on demand content, including its own original series, as well as first-run HBO and Showtime programming for £6.99 a month). Amazon's focus is more on building the value proposition for Amazon Prime.
To some extent, both Amazon and its channel partners are testing the waters with this new offering. And one key area of experimentation is live sport. Discovery, which has not so far made its services available on the US, is about to air French Open tennis on its Eurosport channel and will have rights to other major events including the Olympic games.Unlike its streaming rival Netflix, Amazon has already started offering live sport and this could be a very significant future addition to its online video menu. However, Eurosport - which has an exclusive package to Bundesliga football from next season - will not be available in Germany.
The Amazon Channels target audience therefore will be those customers who do not have a full pay TV subscription but who are looking to boost their current viewing with content from branded and specialist channels. Much like Netflix’s careful addition of niche content to appeal to a broad audience, Amazon Channels represents a wide range of content and genres without requiring the platform to directly take on risk, or perform detailed analysis of consumer demands. Additionally, for many content owners and channels in the market, Amazon now offers a convenient way to deploy the equivalent of a D2C channel, without the need to set up infrastructure, develop apps and portals, or even deploy a billing platform. The promotional benefit of Amazon's massive retail shop window is also important.
This too gives an advantage to consumers wishing to consume OTT content from multiple sources, as simplifying the billing and streaming process to a single location, and the additional functionality of the Amazon Video platform adds both capabilities and convenience above those offered by multiple subscriptions to completely separate services. It is likely that Amazon, currently growing strongly, will see an additional, modest increase in the number of Prime subscribers as a direct result of deploying Amazon Channels - with the majority of additional revenues generated coming from subscribers consolidating existing subscriptions onto the Amazon platforms, or ‘topping up’ their existing Prime Video option.