Amazon made its European debut for the Live Channels package with launch in UK and Germany May 2017.
Amazon has outlined its strategy for global OTT after announcing its European entry with launches of live channels in the UK and Germany.
The aim is to tackle the field by stealth rather than coming in with a big bang, exploiting its formidable global infrastructure and technical prowess while being patient in acquiring premium content rights. However, like Netflix, the company is ramping up its own content production, primarily through Amazon Studios, which produces both movies and TV shows with a budget of $4.5 billion in 2017. This is still behind Netflix, which is spending $6 billion this year, but the gap is closing.
Amazon is leaning on its base of subscribers to Prime, the premium service featuring next day delivery of retail goods among other things, which numbers 80 million in the US alone, or 60% of its customers there. In the UK, the new Live Channels service is available as an upgrade to Prime members, who pay £79 (around $100) a year for that service and can then add the channels unbundled on an individual basis. This includes Eurosport, which costs an extra £6.99 a month and is the closest to a premium offering with some grand slam tennis for example, but does not include the most prized live sports assets in the UK, the English Premier League and Champions League Football.
Nonetheless inclusion of live sport differentiates Amazon from Netflix, which has stated repeatedly that it sees no value in that for an OTT provider unless done on an exclusive basis and probably not even then. That message has been reiterated recently by various Netflix executives, including Todd Yellin, VP of Product Innovation, who confirmed there were no current plans even to dabble in live sports on the grounds that the strategy was to be the best in class at whatever the operator does, based around video storytelling. For the same reason Netflix has also ruled out a move into music streaming.
Cloud matches infrastructure to a particular TV channel and allows bursting at peak times, according to Lee Atkinson, Solutions Architect, Media & Entertainment, Amazon Web Services.
A problem with premium live sports such as top league football in Europe or basketball in the US is that it is used by leading regional legacy operators as a magnet to attract subscribers and then upsell them various packages around broadband and mobile as well as additional linear TV content. That business model does not fit well with pure play OTT and attempting to compete would soon mop up even Netflix’s budget.
Even Amazon with still deeper pockets is concentrating on middle tier or niche content for now, which makes sense at this stage and can be seen as a strength. After all niche channels add up to a lot of viewers and revenue potential between them and Amazon has the capacity to scale up to large numbers. Many of these channels are not available locally on legacy cable, satellite and IPTV platforms, while a lot of the niche audiences are scattered around the globe which makes OTT an ideal vehicle for reaching them.
On the downside, while selling unbundled channels on the surface looks appealing, it will not gain much traction among those seeking aggregated services, which is a significant OTT market. Given that Discovery Channel for example costs £4.99 a month for example from Amazon, taking significant numbers of the 40 channels plus the VoD offerings would be expensive.
The channels in the UK include Discovery Channel, MGM, Shudder, Comic Con HQ, Eurosport Player and ITV Hub+ plus Amazon’s own Bollywood channel, Heera. Notable for their absence are the BBC and Channel 4.
The German offer includes Arthouse CNMA for €3.99 a month, Kixi Select €4.99 a month, MGM – Hollywood Hits at €3.99 and Motorvision TV at €6.99 a month, so again lacking in top drawer content at this stage.
For now then Amazon aims to differentiate through its infrastructure for efficiency and QoS and also technology to compete over added value around the User Interface. The Elastic Compute Cloud (EC2) enables Amazon as well as its customers to avoid costs associated with coping with peaks in traffic as well as geographical differences in demand, according to Lee Atkinson, Solutions Architect, Media & Entertainment, AWS. “Cloud gives a rapid technology refresh rate, matches infrastructure to a particular TV channel and allows an integrated playout service covering both OTT and broadcast,” he said, speaking at the same AWS London event. “This gives business continuity with “five nines” availability and allows us to burst into the cloud for resiliency and to add to channels, like red button short term channels for special events. We can prototype, test ideas for channels and adapt.” Five nines availability equates to five minutes service downtime per year.
Amazon said it will also incorporate elements of its Deep Learning AI based programme instrumental in the relative success of its Alexa voice-controlled personal assistant for functions based on image recognition around objects, scenes, persons and facial attributes. For example, it could display and list all politicians in a video through frame by frame analysis.
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