Analysis: TNT pact not enough to compete with Netflix

A new deal for a pair of basic-cable series is a sign that Amazon is getting more serious about securing exclusive TV content in the U.S. for its subscription VOD service, but it’s going to have to do more to differentiate itself from rivals like Netflix.

The online-retail giant announced Monday that Amazon Instant Prime will be the sole SVOD provider streaming “The Closer” and “Falling Skies,” which should help the service stand out from a growing pack of competitors with increasingly commoditized content catalogs.

The pact represents Amazon’s second exclusive licensing deal this year, having nabbed a temporary lock on “The West Wing” and “Fringe” this past summer. Those series came from Warner Bros. Domestic TV Distribution, as does “Closer.” “Skies” is produced by TNT.

Given that Prime’s first exclusive deal kept an exclusive hold on “Wing” and “Fringe” for just a few months, the subsequent deal is likely an indication that Amazon saw enough sampling of those shows to continue spending the premium required to keep content out of the hands of other SVOD services.

But with no film deals done on an exclusive basis to date nor any truly top-shelf content to call its own on the TV side, Amazon is going to have to get more ambitious as its chief rival, Netflix, reset the bar earlier this month with a stunning grab of rights to Disney movies in the pay-TV window beginning in 2016. Even prior to that bold move, Netflix had exclusive rights to “Mad Men” and “Breaking Bad,” in addition to pay-TV window locks on other smaller studios from Relativity Media to FilmDistrict.

Neither “Closer” nor “Skies” is at the bottom of WBDTD’s remainder bin. In its seven-season run on TNT, “Closer” was a perennial top performer in the basic-cable ratings, with numbers strong enough to top many a broadcast series. “Skies” has followed in its footsteps in its first two seasons and will likely do same for the rest of its run, on which Amazon will have an exclusive hold as well.

But “Closer” is more of a procedural-style series that won’t get the same kind of traction in SVOD that more serialized programming, such as “Mad Men,” has experienced. “Skies” may be the more valuable property here, and in success, Amazon’s ability to offer a catch-up viewing opportunity could send a new influx of viewers to TNT when “Skies” returns for a third season next year.

Another aspect of the SVOD arms race in which Amazon is expected to compete is original programming. Its Amazon Studios unit has a number of TV projects in development. But Netflix has moved faster on that front as well: It’s already rolled out “Lilyhammer” and has at least four more series on tap beginning with the David Fincher adaptation of “House of Cards” in February.

Another SVOD market entrant, Hulu Plus, cited its own increased investment in both exclusive and original content as key to its growth in 2012 in a corporate blog post published Monday. “Hulu Plus has become the only online video subscription service with current season content from Nickelodeon,” wrote CEO Jason Kilar.

Hulu reported that Hulu Plus has 3 million subs — a far cry from the 25 million Netflix sports in the U.S. alone but still double the number the SVOD service counted a year ago. Estimated revenues for the year were up 65% year over year to $695 million, though the company didn’t disclose if it is yet profitable.

Amazon does not break out subscription levels or revenue estimates for Prime, which is bundled into Amazon’s two-day shipping service for $79 a year.

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