Before on-demand viewing became a thing, pay TV was a lucrative business for Sky and Virgin Media. If you wanted multi-channel viewing, they were the only plausible options. New competitors were few and far between, because building your own satellite or cable infrastructure is hard to do.
But in 2017, the story is very different: Netflix, Amazon Instant Video and countless other streaming options vie for attention on your home screen. To its credit, both companies - particularly Sky - have adapted well to this new reality, launching their own streaming services and apps and so on. But with today’s Amazon Channels announcement, Amazon has launched a new, more intense assault on the legacy TV businesses.
Good For Customers and Broadcasters
Earlier today Amazon announced that it’ll be adding some new subscription options for Amazon Prime Customers, that enables them to pay an additional small monthly fee and get access to live and on-demand content from other channels and providers. For example, for £4.99/month you can access the Discovery Channel’s archive. ComicCon TV is £4.99 too. If you’re into sailing, the Nautical Channel (which is apparently a thing) is only £3.99. Bargain!
What’s particularly curious is that a number of the providers have their own separate on-demand offering - such as the British Film Institute - but you can subscribe within Amazon Video for the same price.
This is why it could be a good thing: For companies, it reduces the “friction” for new subscribing users. If they subscribe through Amazon, there’s no need to faff about entering new payment details or downloading new apps and so on. Conceivably, they could sign up new customers is just one click.
And what about customers? Brilliantly, it could bring an end to the litany of shit on-demand apps from smaller providers. If you’ve ever wanted to watch a show on a smaller channel you’ll know what I mean: Apps that are full of bugs and constantly crash. Or apps that are only available on a tiny number of platforms.
Amazon solves this in one go: It has the scale and reach to already be on pretty much every platform. And it has the resources to keep apps updated as technology changes. Whats more, the Amazon Video app is actually nice to use - and now it can bring this user experience to other programming. When the TV channel Dave signs up to have an Amazon Channel, I might finally watch Dave Gorman’s Modern Life Is Goodish. I love the show - I just can’t tolerate the user experience of actually trying to watch it.
Bad For Sky
So all pretty good, right?
Obviously one potential downside is that it gives Amazon even more power, and we’ve already seen how ruthless it is in the publishing industry, given its dominance in book sales. It’s a landgrab by Amazon to not just become a video app, but the only video app you need. But conversely, by taking on Sky, it could give the smaller channels more leverage when it comes to negotiations, as Sky won't be their only outlet. Given the size of Sky, Amazon is one of the few companies that could level this playing field.
The new service could be doubly bad for Sky as it also undermines the Murdoch business model: Traditionally Sky has made its money by bundling channels together. If you want Sky One, you’ve also got to subscribe to 30 other channels that are loaded with crap, for instance. Amazon Channels points to a future that is more unbundled: If you want Discovery, you only pay for Discovery. If you want Anime, you only pay for Viewster Anime, and so on.
This is, obviously, a much more sensible way of doing things, but it does mean that the traditional TV titans might have to worry even more about Amazon approaching in the rearview mirror.