Published:
05-Sep-08
Amazon has launched a second US online video store, Amazon Video on Demand (VoD). Unlike the existing Amazon Unbox download service, Amazon VoD offers instant video streaming. Videos can be rented or purchased, with new release movies costing $14.99 for a permanent copy or $3.99 to rent. Older titles can typically be bought for $9.99 or rented for $2.99. TV shows cost around $1.99.
The first two minutes of any video can be streamed free of charge before requiring payment. A limited selection of TV shows are available to stream for free, including individual episodes from
Heroes and
30 Rock.
Amazon VoD can be accessed through PCs, Macs or internet-connected Sony Bravia TV sets (following the purchase of a $299 (210 Euros) Bravia Internet Video set-top device). Videos are streamed using Flash and content ordered through the new service is centrally stored in an online locker which can be accessed through a computer or connected Bravia television. Alternatively consumers can choose to download their purchase using the Amazon Unbox application.
Videos are delivered via Limelight Networks and streams are encoded at variable bit rates up to 1.2Mbps. Amazon automatically detects a user's broadband speed and selects the highest quality stream the connection can support.
Our take...
The new Amazon store offers several advantages over the retailer's first transactional online video service. Content can be instantly streamed and centrally stored with a selection of free episodes. However, Amazon's catalogue of free TV shows is small, particularly in comparison to that offered by Hulu.
With consumers proving reluctant to pay for content through browser-based stores, Amazon has opted to partner hardware manufacturers to deliver transactional TV shows and movies to the television set. Amazon's partnership with Sony could help to grow video sales but the requirement to purchase a set-top box to access the store through a Bravia TV is a substantial obstacle to adoption.
Even if Amazon VoD generates large numbers of downloads, sales are unlikely to make a significant impact on Amazon's revenues. Retailer margins on digital content sales are low; the transactional online video market leaders (Apple and Microsoft) generate revenue from hardware sales. By choosing to partner hardware manufacturers such as Sony and, previously, TiVo instead of developing an Amazon-branded device the online retailer will not benefit from this primary revenue stream.
Amazon's move to partner Sony removes the exclusivity previously enjoyed by TiVo as the sole hardware company delivering Amazon's digital content to the television screen. Although the ability to access Amazon's video through a TiVo STB is unlikely to be the primary feature driving sales of the device, if consumers can watch the same content through an alternative outlet the appeal of buying the additional STB may be lessened. This loss of exclusivity comes at a time when TiVo's total subscriber base has been declining over the last six quarters.
The Amazon-Sony partnership also has implications for Sony's own online video service. The company has announced its intention to deliver Hancock directly to internet-connected Bravia TVs in November 2008. The agreement with Amazon suggests Sony may opt for a 'multiple vendor' approach on the Bravia TV, offering content from several third party providers, possibly alongside its own Sony-branded video outlet.
USA,
