Prime Video Leaders Pitch the Benefits of Amazon Channels Marketplace

Amazon’s Prime Video platform is pay TV’s most highly trafficked mall.

That was the message sent Wednesday morning by Prime Video brass at a presentation for channel partners on why aligning with the ecommerce behemoth is good for business.

Albert Cheng, VP head of Prime Video U.S., and other top brass, delivered a series of pitches to content partners and prospective partners on the benefits of making their services available for sale via Prime Video’s Subscriptions portal. Cheng and others walked through data points designed to underline that Amazon’s gigantic funnel brings demonstrable results to programmers big (HBO Max, Apple TV+, Paramount+) and niche (Crunchyroll).

The Prime Video Engage event was held in Culver City at the Culver Theater that is adjacent to the Los Angeles-area headquarters of Amazon MGM Studios, Amazon Music, Wondery and other Amazon units.
The Prime Video executives emphasized the amount of energy and investment that Amazon is pouring into R&D and experimentation with advertising technology, data tools and analytics to help Prime Video channel partners make the most of their subscription revenue and ad sales. Prime Video does not offer a cable-style bundle of channels a la but rather it offers users to chance to select streamers and channels on a la carte basis, but with a central billing system handled by Amazon.

“We wanted to set the table for all our partners to understand that we’re here to drive their business through the technology investments we’re making and with our expertise,” Cheng told Variety. “We wanted to let them know all the things that we’re doing to invest in their success. This is all about amplifying their ability to grow the overall streaming ecosystem.”

Amazon has been a re-seller of content from other providers for nearly 20 years, since the platform first embraced transactional video on demand in 2006. Today, with the streaming revolution driving every major media company to embrace direct-to-consumer content platforms, hitching a ride with Amazon by being part of its channel marketplace offers a big boost. Hollywood’s biggest brand names have been humbled in recent years by realizing that they need partners to drive digital traffic.

Of course, Amazon takes a significant fee from subscriptions that are initiated through the Prime Video subscriptions marketplace. Call it the Mall of America for pay TV outlets – and there’s a charge to be there. Amazon’s cut can be a percentage of revenue (typically around 30%), but it can also be calculated in other ways.

The overriding message from Wednesday’s presentation at the Culver Theater was – any fees are worth it because of all the benefits that Amazon brings.

“What we’re trying to clearly define is the whole concept of the marketplace, which is a very Amazon thing. What we’re doing here with our partners is similar to how Amazon.com does business with third party sellers, and how we’re approaching AI through AWS,” Cheng said. “We are selling a selection to customers everywhere. It’s not bundling, per se, but it’s what I would call a la carte TV. That’s something consumers have wanted forever. And so we’re trying to optimize the best thing for our customers. And then we make sure that we are providing flexibility and giving our partners the tools to be able to reach [consumers] much more cost effectively. We’re trying to improve the overall experience for everyone.”

The presentation included case studies and very detailed data showing how much incremental subscription activity Prime Video’s channel marketplace drove for HBO Max, Apple TV+, Paramount+ and Crunchyroll. HBO Max had a public falling out with Amazon over fees shortly after the streamer launched in 2020. But by December 2022, HBO Max was back on the platform and Amazon’s data crunch indicated that some 2.3 million subscribers signed on to HBO Max over the next year – activity that Amazon asserted would not likely have happened but for the HBO Max brand being available in the Prime Video channel marketplace.

Cheng touted Prime Video’s own subscriber base of more than 200 million Prime members worldwide who access the platform on more than 9,000 different devices. “We understand storefront dynamics,” Cheng said. He called Prime “a uniquely valuable customer base” and noted that the channels marketplace amounts to “a massive opportunity get your films, series and subscriptions in front of them.”
Amazon’s platform also interacts with “tens of millions” of other consumers who are not Prime members, Cheng added.

In addition to subscriptions, being a portal for viewers to find FAST and linear channel offerings are a growing business for Prime Video.

Tricia Lee, director of product and data for Prime Video’s partner and content foundations, followed Cheng with an overview and updates on technology and capabilities.

Not surprisingly, Amazon is investing heavily in AI tools that allow users to customize and tailor programming and channels to their tastes. Sports is a big area of focus for Amazon as Prime Video continues to invest in rights including NBA games coming to the platform starting in October.
“We’re pushing the boundaries on sports activations and customizations,” Lee said. “We’re just getting started.”

Prime Video’s analytics are also being upgraded to make it easier for channel partners to track viewer habits. That should help facilitate “data-driven decisions about content strategy,” Lee said.
Jeremy Helfand, VP and head of Prime Video Advertising, showed off some of Amazon’s new ad-tech features. Not surprisingly, Amazon is investing big in “shoppable ads” that allow users to purchase items with one click without having to leave the streaming platform.

Helfand echoed Cheng by likening Amazon’s approach to sharing ad innovations with partners to how its mothership ecommerce business grew exponentially once the Amazon.com marketplace opened up to third-party sellers.

“We’ve grown by helping our partners grow,” Helfand said. Amazon is “combining streaming and commerce and advertising in ways no one else can.”

Helfand also offered evidence to support the claim that consumers are OK with advertising-supported streaming platforms.

In the 18 months since advertising was introduced to Amazon’s proprietary Prime Video programming service, it now counts 130 million ad-supported viewers in the U.S. The service has seen 40% growth in total viewing hours and in the metric that matters at Amazon, some 88% of those viewers “actively shop at Amazon,” Helfand said.

Helfand gave a big plug to a new feature that is rolling out to allow advertisers to deliver “contextual” ads that relate in some way to what the viewer is watching at any given time. “It’s aligning them with what’s on the screen – a scene, a story, a mood,” Helfand said.

The morning portion of the presentation concluded with a report on sector-wide data on the U.S. streaming marketplace from Jonathan Carson, co-founder and CEO of research firm Antenna. Carson reinforced Helfand’s pitch by showing numbers indicating that the launch of ad-supported tiers for Amazon, Netflix, Disney+ and other streamers that were previously commercial-free has fueled some 46% of subscriber growth in the past year.

Among Carson’s other notable points was data on the level of churn among subscribers to direct-to-consumer platforms. The ease of turning a streaming service on and off – compared to canceling cable or satellite TV service — has been an industry-wide challenge for subscriber retention. Carson noted that the long-term numbers indicate “churn is starting to stabilize a bit.”

Moreover, there’s a boomerang effect. “The people who do churn frequently come back,” Carson added.
One out of five people who cancel a service decided to resubscribe within four months. One out of three come back within 12 months.

“They don’t actually cancel – they pause,” Carson said. “If you lose them, there’s a very good chance to win them back.”

(Pictured top: Prime Video’s Albert Cheng)