Well-known industry analyst Alan Wolk is publishing his popular Week In Review columns first on Fierce Video every Friday. This means that Fierce Video readers are the first to get all Wolk's insights as they navigate the fast-moving television business.
1. Amazon Buys MGM
Amazon bought MGM Studios this week for a whopping $8.45 billion, causing various media outlets to go all aflutter with more “streaming wars” stories.
But not really.
Amazon is an outlier in the streaming wars because they have a completely different game plan than everyone else. Prime Video is sort of a reward for buying their free two-day home delivery product. Not the other way around.
Why It Matters
To revive an old meme construct, “I don’t know whether I should subscribe to Netflix or Amazon Prime.” Said no one ever.
People subscribe to Prime so they don’t need to make a special trip to CVS because they’re running out of toothpaste or because they just want to reorder the same running shoes they already have, a behavior that has only become more ingrained during the pandemic.
They don’t subscribe because they love “Transparent” or “The Marvelous Mrs. Maisel.” Those are just rewards that come with the free two-day delivery and it’s pointless to speculate about whether they would indeed subscribe without the free delivery because it’s unlikely to go away.
Meaning that Amazon has far more nuanced reasons for wanting MGM’s programming than “beating Netflix in the streaming wars.”
All of Amazon’s reasons however stem from this simple fact: MGM’s movies and TV series will keep people on the Amazon platform for longer periods of time.
That, in turn, makes it easier for Amazon to try and upsell them on subscriptions to other services (Amazon makes a huge chunk of change off of this) and to steer them towards IMDb TV, where Amazon can serve ads to them. It informs what products Amazon is going to show them on their homepage next time they log in. And on a macro level, it keeps them inside Amazon World for longer and longer periods of time.
That is the real value of this deal for Amazon, as the company is still in the midst of wrapping its head around the value of its massive viewing audience and the various other ways (e.g., T-commerce) they can be monetized.
What You Need To Do About It
If you’re one of the other Flixes, stop worrying about Amazon as a competitor and worry about them more as a reseller of subscriptions. They make it very easy for viewers to add your service to the mix so that your shows are in the main menu on both Prime and Fire TV. Many (most?) viewers like having all their TV in a single interface and that’s a behavior you’re unlikely to change so you can either fight it and hope you can convince viewers to go directly to your app or give in on the assumption that you’ll get enough subscription dollars via Amazon to make up for all that lost data.
If you’re Amazon, you need to figure out what to do with IMDb TV. Sending Prime viewers there and not telling them they’re on a different platform may be a good plan for scoring additional ad revenue, but if you want to build IMDb TV into a destination site, then you need to give it its own identity and reasons for being. Other than selling your advertising that is.
If you’re Apple, MGM is another one that got away. Having minimal content may be your strategy after all, but if it’s not, your options are slowly slipping away.
2. Max Goes Mobile
HBO Max is rolling out in much of the Western Hemisphere this week, offering a variety of plans including a single user mobile-only plan that will sell for as little as $3/month on a yearly plan.
Why It Matters
HBO seems to be learning from Netflix which went into many developing markets charging the equivalent of around $10 U.S. for a monthly subscription only to find that there weren’t very many takers, given that few people had that kind of disposable income.
Or an actual television set, for that matter.
Thus, Netflix experimented with a $5/month mobile-only plan in some countries which proved somewhat more successful, but is likely still priced too high for mass adoption. To wit, in India, Disney’s ad-supported Hotstar service, which can cost as little as 40 cents/month, is mopping the floor with Netflix and Amazon.
By acknowledging that many potential customers in the Caribbean, South and Central America will also fall into this category, HBO made the wise decision to offer the mobile plan, where “single user” refers more to the number of unique profiles that can be created on an account rather than the number of people who will eventually wind up using it.
The international market is where the Streaming Wars are really going down and understanding that viewers in those markets can’t pay the same rates as viewers in North America and Western Europe is a big plus.
What You Need To Do About It
If you’re HBO Max, keep doing what you’re doing, especially once you have Discovery in the picture. Discovery’s nature programming in particular translates nicely into other countries (no on camera talent speaking English) and it’s unique among the Flixes as well.
If you’re the other Flixes--Disney, Peacock and Paramount+ in particular, make sure you’re taking notes and monitoring results. The more services there are internationally, the more consumer budgets will be stretched. This is a case where first mover advantage will likely play a huge role, especially if, like HBO, those first movers are locking viewers into year-long contracts. So have a plan.