By nScreenMedia’s Colin Dixon
Amazon ad-supported streaming is coming later this year. Content providers will welcome the option, and it could boost Amazon’s video engagement as well.
Amazon to launch ad-supported streaming channels this year
Though new to the U.S., Amazon is already delivering ad-supported channels in Europe. When the company launched the Channels program in the UK last year, it included linear ad-supported channels in the mix. UK Amazon Prime customers can subscribe to Eurosport and Discovery, both widely available on pay TV systems, for £6.99 and £4.99 a month ($10 and $7) respectively.
Speaking at Digiday’s Future of TV Hot Topic in New York last week, Rich Au, head of Amazon Channels in the U.S., said the company would begin to offer ad-supported services later this year. He also said that the ad-supported offering would be separate to the Channels program.
W can interpret Mr. Au’s comments in several ways. He could mean that Amazon will launch linear channels a la carte, as it has in the UK. However, in the UK the linear channels are part of the Channels offering. Launching ad-supported service outside of Channels could mean that Amazon is preparing a vMVPD service, like Sling TV, which it will launch under a different brand (Amazon TV, perhaps?). It could even mean it is working with one or more of the existing vMVPDs to create a marketplace like Channels, but for linear video services.
That said, the most straight-forward approach is to partner with strong TV brands, as it has in Europe.
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Early partners for ad-supported delivery
Mr. Au gave no details of possible partners for ad-supported streaming. That said, there are two likely candidates. With its Amazon partnership in Europe, Discovery seems like a natural fit. It has been losing out to National Geographic in many of the vMVPD services, so availability a la carte inside Amazon could help it to establish a stronger footprint online.
CBS All Access could also be an early mover. The service is available direct-to-consumer for $6.99 a month with ads and with the local CBS affiliate channel included. A customer can pay $4 more and watch on-demand ad-free. In Amazon Prime, customers can subscribe to CBS All Access for $9.99 a month but will only see on-demand content and will see no ads. CBS could duplicate the whole All Access experience on Amazon with the addition of ad-supported services.
CBS could go one step further with Amazon. It could deliver CBSN, its online subscription-free ad-support news channel, through Amazon to help broaden the audience. A free ad-supported channel could be a huge plus for Amazon, helping it boost engagement with the service. And it could use some help with engagement.
Amazon could use a lift in engagement
Partners that are willing to talk about the Amazon Channels program are pleased with its performance. Some partners are reporting that between 25% and 45% of subscribers are coming from Amazon. However, usage of Amazon for streaming video doesn’t reflect some partners’ enthusiasm for service.
The number of people saying they use Amazon video has increased from 12.9% of U.S. adults in Q3 2013 to 22.1% in Q3 2017. However, more than twice as many people say they use Netflix. What’s more, Netflix commands far higher engagement than Amazon.
Comscore reported that in April of last year the average streaming household watched Netflix for 27 hours over the month. Amazon attracted just 11 hours of viewing.
Will ad-supported services improve Amazon usage?
The addition of linear ad-supported viewing could help boost Amazon’s engagement. If consumers are willing to subscribe to individual linear channels, they will likely use them just like TV. In other words, they will start streaming them and leave them running. And if those ad-supported channels are available with no additional charge, that could be the boost to engagement Amazon needs.
Why it matters
Amazon will introduce ad-supported streaming channels later in 2018.
Likely early partners to take advantage of the functionality are CBS and Discovery.
Linear ad-supported channels could help boost Amazon’s engagement closer to Netflix.
If some ad-supported channels are available for free engagement will be boosted even more.