Why is Amazon’s Interest in Pay TV a Big Deal?

by Brett Sappington | Jan. 22, 2014

News from the Wall Street Journal that Amazon is making content inquiries about licensing of linear channels for a streaming pay-TV service shouldn’t be a big surprise. After all, what player in the connected CE and online video space hasn’t looked into that possibility recently? (Content providers must be absolutely giddy about everyone coming out of the woodwork to ask about content licensing.)

While Intel and others have tested the waters recently (with Intel finding them to be a bit deep for their liking), Amazon’s interest should cause a few more pay-TV provider hearts to quake than would other potential entrants. Why?

  • Established service. Unlike other players, Amazon already has a well-known brand name associated with a content service. Adding pay-TV would simply build on an existing customer base.
  • Channel. Amazon can leverage its popular online store to reach millions of consumers in a way that other potential entrants cannot. Many consumers already have their credit card information already stored on Amazon. So, activation of a service could happen with one click.
  • Device platforms. Amazon is preparing a set-top box to go along with its already successful Kindle platform. Both of these devices will give Amazon a reach into many homes that other players cannot rival. In addition, Amazon could potentially link the devices in the future, providing a platform for second screen experiences.
  • Advertising. With Amazon’s existing ad network, the company could immediately monetize a linear TV service in a way that few others can match.
  • Alternative monetization. Amazon can allow users to buy products directly through online advertising, which should produce additional revenues for Amazon and drive advertisers to an Amazon pay-TV service.

At present, Amazon is denying that it has any plans for pay TV. For the right licensing cost, initial inquiries could become plans very quickly.

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