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Straight Talk Media & Entertainment

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Amazon's new blockbuster original TV series Grand Tour was released November 18, 2016, to Amazon Video subscribers in the US, Japan, the UK, Germany, and Austria. Amazon CEO Jeff Bezos and series presenter Jeremy Clarkson have tweeted that the show will be available exclusively to Amazon in 200 markets come December 2016. As Amazon Video is currently available in only five markets, that might mean Amazon is about to launch the service on a global basis.

While the shape and form of Amazon Video's forthcoming global expansion is by no means obvious, this does present a change in strategy for Amazon. First, until relatively recently, Amazon had retained exclusive rights to its original series in territories where it has Amazon Video, while opting to license some content to third-party SVOD and pay-TV services in select markets. Amazon has now decided to retain exclusive global rights to all new originals. Second, and more important, Amazon Video has previously been used to add value to Amazon Prime subscriptions; this move, which follows Netflix's recent global rollout, appears to be one that is fundamentally separate from Prime.

A global Amazon Video is likely to comprise predominantly shows and movies produced by Amazon ("Amazon Originals") at launch, meaning it will offer a significantly smaller catalog than Netflix in most markets. That presents two possible scenarios: Either Amazon will market its global video service with a very aggressive low monthly charge of perhaps less than $5 per month in order to compete with Netflix, or it launches the service with the $9-per-month price point that it uses for its non-Prime standalone SVOD service in the US.

In either case, Amazon Video Global should be relatively successful, especially coming a year on from Netflix's global expansion, which has already encouraged many new consumers to test out SVOD services. With a small yet exclusive catalog that we assume will improve over time as Amazon makes more shows and movies, Amazon Video is sufficiently differentiated from Netflix to compete as an add-on service in the immediate future. Given forthcoming increases in original programming in 2017, Amazon Video is likely to have loftier ambitions for growth in international markets where SVOD penetration is still relatively low.

Ovum thinks the potential impact of Amazon Video on a global scale will be relatively small to begin with. In our preliminary view, the total number of Amazon SVOD subscribers in new video markets (i.e., excluding the US, the UK, Germany, Austria, and Japan) may be anywhere between 1 million and 3 million by the end of 2017. This will depend on a number of considerations, of course, not the least how Amazon intends to market the service and particularly its pricing strategy in developing markets such as Asia. However, the real impact may only just start to be felt in 2018; in that year, Amazon may expect between 3 million and 5 million subs across new markets.

Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.

Research picks

  • 1.SVOD's Grand Global Tour

Recent statements from Amazon suggest that it is about to launch Amazon Video on a global basis. While the shape and form of Amazon Video's forthcoming global expansion is by no means obvious, this does present a change in strategy for Amazon.

https://www.ovumkc.com/product/ME0003-000770

Research Channel: TV https://www.ovumkc.com/Products/Service-Provider/TV

  • 2.2017 Trends to Watch: Digital Advertising

The digital advertising market has evolved rapidly each year since its inception, and 2017 will be no exception. Ovum expects to see continued M&A activity alongside further launches of intelligent agents and chat bots.

https://www.ovumkc.com/product/ME0002-000725

Research Channel: Digital Media https://www.ovumkc.com/Products/Service-Provider/Digital-Media

  • 3.TV Technology Announcements Tracker: 3Q16

This spreadsheet provides an overview of the latest TV technology announcements and can be organized by region, vendor, deal type, platform, device type, and feature.

https://www.ovumkc.com/product/TE0004-001128

Research Channel: TV https://www.ovumkc.com/Products/Service-Provider/TV

  • 4.VR/AR Investment Trends: Apple leads in M&A, while Samsung is the most active investor

Tech and media companies have invested more than $7bn into VR and AR since 2010, both in terms of acquisitions and stakes in VR- or AR-related startups.

https://www.ovumkc.com/product/TE0004-001130

Research Channel: Digital Media https://www.ovumkc.com/Products/Service-Provider/Digital-Media

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