Amazon’s New Online Video Platform Doesn’t Need To Beat YouTube To Win

Amazon’s New Online Video Platform Doesn’t Need To Beat YouTube To Win

This week Amazon ratcheted up its attack on online video platforms, going squarely, it seems, after YouTube and Vimeo, and to a lesser extent Netflix and Facebook. Its new service, Amazon Video Direct, will let anyone upload video content to Amazon and its ad-free Prime Video service, and take home a share of revenues from rentals, sales, and streams.

Under the program, Amazon Video Direct, content creators will receive either 55% of revenues from rentals or sales of videos, or $0.15 per hour streamed, with a cap of $75,000 a year. There’s also the opportunity to sell videos as an add-on subscription to Prime Video through the Streaming Partners Program, or to have them stream to any Amazon customer with ads, in which case the creator gets a 55% share of ad revenues.

The swelling online video ad market and the growing number of online viewers (who to an e-commerce company like Amazon are essentially customers) are spurring everyone from social media giants like Facebook to newer upstarts like Vessel to go after video creators and woo them with ever more advantageous deals. The play also expands Amazon’s dive into video content, which it has been aggressively pursuing in recent years with original series like Transparent, Mozart in the Jungle, and an upcoming Woody Allen series.

Interestingly, Amazon’s new proposition isn’t that much more financially appealing than YouTube’s, but the fact that it is giving creators a great deal of flexibility and empowerment to determine how and where their stuff is streamed is a savvy move on Amazon’s part. YouTubers have long complained about the power that the Google-owned company wields over them, even as it has made some of them very, very rich. Many have complained about the 60-40 revenue split with AdSense, while YouTube Red, the company’s $9.99 a month subscription service, incited grumbling that YouTube was forcing some of its stars to go behind a paywall. So even if Amazon isn’t offering to print money for creators, selling AVD as a “self-service” platform is a way for it to amplify the message that it’s putting creators first.

Built on the idea that more content will drive more Prime subscriptions, and the idea that “if we can have customers engage with our content, they will spend more time shopping.”Still, uploading videos to Amazon is more cumbersome and time-intensive than on other video sites: Uploaders must include their credit card and social security number, and videos must be captioned (Amazon offers a fee-based service that will build caption files for each video). And videos don’t appear immediately as they do on YouTube, Facebook, or Vimeo: The company says it will take 3-5 days before your video appears online.

But the process indicates the emphasis that Amazon is placing on attracting professional and semi-pro video creators, the sort that draw large fanbases and millions of views. It’s also signed on companies like Conde Nast and The Guardian, who will upload their video content to the platform.

Amazon already spends an estimated $3 billion annually on its streaming video content, and according to estimates by Piper Jaffray, boasts between 57 million and 61 million Prime subscribers, compared with Netflix’s 75 million monthly subscribers. Meanwhile, eMarketer estimates that digital video advertising will grow by 28.5% this year to $9.84 billion, and nearly $2 billion of that pie will go to YouTube, which boasts over 1 billion monthly users.

Of course, the ultimate beneficiary of AVD is Amazon itself, for which AVD is—more than anything else—a marketing tool. “This a continuing strategy of Amazon to utilize content to promote its underlying business model and deepen engagement with customers, which will ultimately lead to more and more sales,” said Peter Csathy, CEO of Manatt Digital Media.

In other words, he said, Amazon’s is thinking, “If we can have customers engage with our content, they will spend more time shopping.”

The platform can also deepen Amazon’s relationships with its sellers. Small businesses, say, can create marketing videos or clips that tell their story (or even just creative content) and then drive viewers back to their retail page.

Will it work? Amazon’s biggest challenge will be to direct eyeballs to its new video offerings. Are Transparent fans going to want to see user-generated clips made by video stars? Amazon’s credit-card-carrying users skew older than either YouTube or Facebook. And Amazon lacks the sociability of those sites, where content is constantly shared and liked by communities of friends and fans.

It’s not likely Amazon is not going to run YouTube, which has a decade of experience on its competitors, out of business. But if the real end goal is to capture a few spare minutes of its customers’ attention, and encourage a new subscription to Amazon Prime or a retail purchase, then it’s on its way to winning.

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