×
You will be redirected back to your article in seconds

Amazon’s Prime Video Channels Biz to Generate $1.7 Billion in 2018 (Analysts)

Amazon doesn’t offer a “skinny bundle” of streaming TV channels — but its à la carte Prime Video Channels service is having a huge economic impact on the pay-TV business.

According to new estimates from BMO Capital Markets, Amazon’s Prime Video Channels will pull in $1.7 billion of revenue this year, more than double from last year’s $700 million. That’s poised to grow to $3.6 billion in 2020 worldwide.

Assuming the ecommerce giant shares on average 70% of the subscription fees, Amazon will pay out $1.2 billion in 2018 to Prime Video Channels partners — ballooning to $2.5 billion in 2020, the firm’s analyst predicted.

“We believe [Prime Video Channels] is a material driver of standalone [over-the-top] subscribers for many entertainment companies,” representing anywhere from 25%-45% of total OTT users depending on the channel, BMO analysts Daniel Salmon and William Lowden wrote in the report.

In the U.S., Amazon’s Prime Video Channels currently provides a selection of 156 channels. Those include CBS All Access, WarnerMedia’s HBO, Cinemax, and Boomerang; Lionsgate’s Starz; PBS Kids and Masterpiece; Viacom’s Noggin and Comedy Central Now; Hallmark Movies Now; Lifetime Movie Club; Tribeca Shortlist; BBC/ITV’s Britbox; CuriosityStream; Cheddar; and AMC Networks’ Urban Movie Channel, Acorn TV, Sundance Now and Shudder. All movies and TV shows included with the subscriptions are available to watch on-demand, and many channels also provide live-streaming feeds.

A huge advantage Amazon offers partners is massive scale: It currently has about 75 million Prime Video worldwide (including about 40 million in the U.S.) and is on pace to top 100 million by 2020, BMO’s analysts estimated. Amazon earlier this year announced that it had surpassed 100 million Prime members globally but hasn’t broken out numbers beyond that.

In addition, Amazon removes friction from the OTT-subscription process, letting customers purchase access to a channel with a few clicks and by integrating the video services into a unified service available across several hundred devices.

But there’s a tradeoff: Amazon takes anywhere from 15%-50% of the channel subscription fees (estimated to be 30% on average), with bigger players like HBO and Showtime gaining more favorable splits. That’s compared with those media companies keeping 100% for subs through their own, direct-to-consumer services. Plus, Prime Video Channels removes media companies’ direct customer relationship (and limits the data they are able to collect), the BMO analysts pointed out.

Still, on a per-subscriber basis, media partners earn more from distributing their OTT services through Prime Video Channels than from deals in which their channels are bundled into traditional pay-TV or “virtual MVPD” internet services, like Sling TV, YouTube TV, DirecTV Now or Hulu With Live TV, according to BMO’s analysis.

Meanwhile, Amazon is continuing to expand access to Prime Video — including with Comcast, the U.S.’s biggest cable operator. This week, Comcast began rolling out Amazon Prime Video to Xfinity X1 subs, which includes access most of the channels they subscribe to through Prime Video Channels (with the exception of HBO/Cinemax and CBS All Access because of the programmers’ contractual restrictions in their deals with Amazon).

Amazon first launched the program in December 2015 as the “Streaming Partners Program” in the U.S. with about 20 partners, and has since expanded and rebranded the service as Prime Video Channels. The company has launched Prime Video Channels in the U.K., Germany, Austria and Japan. The BMO analysts identified France, Spain, Italy, Canada, and India as potential markets where Amazon could roll it out next.

Context: For a company the size of Amazon — which analysts currently expect to record $232 billion in revenue in 2018 — the video channels wholesale business is small potatoes. But it’s growing. Amazon netted $200 million in revenue from Prime Video Channels in 2017; that’s projected to increase to approximately $1.1 billion by 2020, BMO’s Salmon and Lowden wrote. Eventually, Prime Video Channels could become an opportunity for Amazon to generate incremental ad revenue, they added.

More Digital

  • Facebook Logo

    #LogOutFacebook: NAACP Calls for Boycott, Civil Rights Groups Demand Board Changes

    The NAACP is calling on Facebook users to take part in a one-day boycott of the social network this Tuesday to pressure the company to do more against disinformation and racial discrimination. Separately, a coalition of about three dozen social justice groups called on Facebook to remove key executives from its board of directors. The [...]

  • Westworld Season 2 HBO

    Facebook Has Talked With HBO, Showtime and Other Networks but It's Unlikely to Proceed With Pay-TV Idea

    Is Facebook about to become cable TV provider? Don’t bet on it. The social giant has held informal discussions with cable networks including HBO and Showtime Networks about potentially offering subscriptions to their streaming services on Facebook, multiple sources tell Variety, confirming a Recode report last week that first reported the talks. However, Facebook currently [...]

  • Ed Sheeran Shape of You

    Ed Sheeran, Clean Bandit Top Shazam’s 2018 Year-End Lists

    Clean Bandit and Demi Lovato’s song “Solo” was the most-Shazamed song and Ed Sheeran’s “Perfect” was the longest running No. 1 track on the service’s global charts, the company revealed today in its year-end lists. Nicky Jam and J Balvin’s “X” was the No. 2 most-Shazamed song and Calvin Harris & Dua Lipa’s “One Kiss” [...]

  • Remote for Android TV-Based TiVo Device

    TiVo FCC Filing Suggests Android TV Device Coming in Time for CES

    A filing for a new TiVo remote control suggests that the company may be getting ready to show an Android TV-based set-top box at CES in Las Vegas next month. The device likely won’t be sold to end users, but instead ship to TV operators looking to combine TiVo’s DVR capabilities with Google’s TV platform. [...]

  • Telemundo to Launch English-Language Newscast With

    Telemundo to Launch First English-Language Newscast on YouTube (EXCLUSIVE)

    NBCUniversal’s Hispanic broadcaster Telemundo is developing its first English-language newscast in collaboration with YouTube in a bid to tap the burgeoning U.S. Hispanic youth demographic. Borne out of a YouTube grant aimed at awarding journalism projects that “elevate quality journalism, evolve business models to drive sustainable growth, and empower news organizations through technological innovation,” Telemundo News’ [...]

  • Wall Street Journal Site Hacked With

    Wall Street Journal Site Hacked With Pro-PewDiePie Message

    PewDiePie’s ongoing battle to keep his channel’s YouTube subscriber count No. 1 ahead of India’s T-Series took another bizarre twist: A branded-content section of the Wall Street Journal’s website was hacked with a fake message apologizing to PewDiePie and urging people to subscribe to his channel. A spokeswoman for Dow Jones & Co., publisher of the [...]

  • YouTube - Comcast Xfinity X1

    YouTube 4K Content Goes Live on Comcast's Xfinity X1 Set-Tops

    Comcast television subscribers can now enjoy YouTube in ultra-high definition: The Google-owned video service is now serving up 4K videos on Comcast’s Xfinity X1 set-top boxes, the cable company announced Monday. X1 owners who also happen to have a X1 voice remote can get access to a curated selection of 4K content by asking the [...]

More From Our Brands

Access exclusive content