Why is Amazon in entertainment? | Comment
A lot of people will write smart things about Amazon’s strategy with Metro-Goldwyn-Mayer, the movie studio that Amazon has announced it will buy for $ 8.45 billion. But I want to ask a more fundamental question: why?
Not why Amazon is buying MGM, which owns the rights to James Bond and “RoboCop”. Presumably, Amazon will use it to extract ideas for new series and movies for its Prime Video streaming entertainment service. No, I’m asking why does Amazon offer video streaming service?
Is video a valuable benefit for Prime members or a multibillion dollar vanity project for Amazon?
On the rare occasions when Amazon executives have discussed their goals for Prime Video, they’ve focused on the power of loyalty. They say the inclusion of a video service in Prime is one more reason for people to stick with Amazon’s membership program and feel like they’re getting good value from both. parcel shipping at no additional cost and “Bosch” on request. My colleague Karen Weise reported that households with Prime subscriptions typically spend $ 3,000 per year on Amazon, more than double what households without a subscription spend, according to Morgan Stanley.
Amazon said people who use Prime Video are more likely to renew their subscription every year or pay if they participate in free trial programs, and they buy more products from Amazon. But in his new book on Amazon, journalist and author Brad Stone suggests that may not be entirely true.
He writes that some Amazon employees who worked in the entertainment division analyzed how many Prime members watched shows and then extended their Prime membership or signed up. “There was little evidence of a link between viewing and buying behavior,” Stone writes. “The truth was this: Bezos research Amazon for making TV shows and movies. “
The divergence between Prime Video’s stated goals and the perhaps more pedestrian reality highlights a dichotomy of Amazon and other tech superpowers. They are so wealthy and successful in some areas that they can afford to fight in others.
Amazon’s success in online shopping and cloud computing – and, most importantly, the belief among fans and detractors that the company is a powerful and disruptive genius – has masked Amazon’s questionable strategies in grocery stores and the market. streaming. And it reduced the urgency to fix a clunky online shopping experience that we can’t always trust that looks like it hasn’t been updated since the 1990s.
The hugely profitable Facebook and Google ad companies reinforce their inability to know what to do with … well, almost everything else these companies are involved in, including Facebook’s groping to turn WhatsApp into a business and the years of Google’s struggle in online shopping. I don’t know whether to find comforting or scary that these companies are both crazy smart and sometimes stumbling in the dark.
In Prime Video, we don’t hear Amazon executives justifying the expense or presenting its value to Prime members. The allure of fast, free shipping might be enough. Or would Prime members be more loyal if the company offered different perks – for example, free internet service, online fitness classes, access to personal buyers, or more Kindle books? Walmart’s version of Prime offers discounts at some gas stations.
I don’t know if any of these alternatives are convincing, but I also don’t know that the video is an attractive add-on from Prime. Only Amazon knows that, really, and it’s not telling.
There is a chance that Amazon will play a very long game with Prime Video. I can imagine a future where Amazon uses ads on Prime Video and its other online video sites to get us interested in new products and then sells them to us as well. Amazon would encompass the entire lifespan of purchases, from “Huh, that sounds interesting” to clicking buy. (Stone suggested this possibility in a recent newsletter.)
Or maybe I’m falling into the trap of assuming there must be some grand design behind what Amazon and other big companies are doing. Maybe making movies is pretty cool.