Amazon this week revealed it’s testing data sharing on its Channels platform with Discovery+, a move that could bring the industry closer to new pay TV model.
During a keynote interview at Fierce Video’s StreamTV World event, Elisabetta Carruba, general manager of Prime Video Channels in Europe, confirmed the test. While it’s still only in the trial phase and there’s no scalable solution yet, the agreement between the companies marks a big change in how streaming aggregation platforms and content providers typically do business, and potentially removes hurdles that have caused services like HBO Max to exit Channels.
JB Perrette, president and CEO of Discovery Streaming and International, this week also confirmed the customer data sharing agreement with Amazon Channels.
“It’s an important differentiator that doesn’t make this just a traditional, anonymized channel store relationship, but one where we actually have customer information on the channel store consumer,” he said, adding that after Discovery and WarnerMedia merge next year, they’ll have a conversation about whether the Discovery+ or HBO Max strategy toward Channels makes the most sense going forward.
“The North Star will be two things: how do we get the product in front of more consumers in aggregate, and how do we do it in a financially strong way? If we think we can still get the customer relationship but get in front of more people with the right economics, I think it’s [a model] that we will remain very open to,” Perrette said.
Control over customer data and direct relationships has been at the heart of some distribution disputes for Amazon Channels and streaming services. It’s one of the biggest reasons why Netflix, Hulu, Disney+, HBO Max and other major SVODs don’t sell their services directly through Channels.
MoffettNathanson estimated that the top eight U.S. SVODs have approximately 195 million combined domestic subscribers and that about 137 million are direct relationships.
However, if Amazon Channels continues to loosen its grip on customer data, more SVODs might reconsider it as a distribution platform, which could help bring about The Diffusion Group’s (TDG) vision for “Pay TV 3.0.” For years, the analyst firm has predicted that Pay TV 1.0 (traditional linear channel distribution over private networks) and Pay TV 2.0 (a similar model but over the open internet) would give way to Pay TV 3.0. TDG describes it as large streaming aggregators bundling SVOD apps and providing integrated ordering, billing and customer service; unified search and recommendations; easy addition/cancellation; a single portal for viewing; and multi-app packages with discounts.
“For both the operator and app owner, 3.0 presents a unique opportunity to lock down streaming subscriptions for a specific amount of time, something new to the SVOD world,” said Michael Greeson, TDG founder and principal analyst, in a research note. “Such guarantees may provide leverage for 3.0 operators in negotiating carriage rates from app owners, savings that in theory could be passed on to the consumer in the form of discounts. If this sounds familiar, that’s because it is. The 3.0 model is built on the same fundamentals on which MVPD bundles have long been built. Thus, the moniker.”
TDG said the appeal of a 3.0 aggregator is growing as households continually take up more and more SVOD apps.
“As Amazon’s announcement indicates, the tech-media giants are already making a move in this direction. Broadband operators should do the same, or risk losing their SVOD viewers to competitors,” said Greeson.
Besides Discovery, ViacomCBS this week also praised its Paramount+ and Showtime relationships with Amazon Channels for providing access to the larger total addressable market. However, CEO Bob Bakish admitted there are trade offs around exclusivity requests and data access, and that the relationship is something ViacomCBS will need to continue evaluating over time.
However, if Amazon Channels can find a way going forward to share more customer data with its content partners, the platform could become a long-term home for SVOD services and a true embodiment of “Pay TV 3.0.”