March 18, 2019
Amazon’s video strategy: blending commerce and content so Prime members spend more
Amazon has been a disruptive force in almost every industry that it has touched. With Amazon’s recent Prime Video spending, it looks like the media industry will be no exception. Unlike broadcast TV or streaming media such as Netflix or HBO, Amazon can natively blend commerce and content, selling its merchandise directly in-line with its video content. Consumers can watch and buy all from one location: amazon.com.
That’s why Amazon looks at content creation through an entirely different lens than traditional media companies. Traditional media companies focus on advertising revenue. Amazon, on the other hand, cares about getting new prime subscribers and keeping them on-site for as long as possible. It has over 100,000,000 prime members with their credit cards on file. These prime members spend an average $1,400 a year on amazon.com. The longer Amazon can keep prime members engaged, the more money they will spend.
Amazon knows that nothing engages more than video. In the past, it focused on creating award-winning content. The problem with this strategy was that the award-winning content appealed to a very limited audience. Recently though, Amazon shifted focus to delivering broadly appealing content to its Prime members. In-line with this new strategy, it acquired the rights to develop a Lord of the Rings TV series. Amazon spent $250,000,000, setting the record for the largest price ever paid for TV rights.
Amazon plans to run at least five seasons of the series and will promote the show alongside J.R.R. Tolkien books on amazon.com. This blending of video content and commerce will likely lead to an explosion in Tolkien product sales.
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