As I read “The Everything Store,” one thing is clear to me: Amazon and Jeff Bezos are more than willing to spend money, even if there’s no clear return on investment. While the company rakes in billions in revenue, they frequently lose money. Amazon Prime, for example, is $79 for an annual membership and includes free two-day shipping on everything, plus access to Amazon Instant Video. The company doesn’t breakdown costs or subscribers, but it’s highly unlikely that Prime yields any ROI – it keeps customers coming back to Amazon, which the company needs.
This leads us to the rumor that Amazon is pursuing a pay TV option, a report the company has since denied (as they should, real or not). In 2013, Amazon spent somewhere around $1 billion on original content for Instant Video to compete directly with Netflix and Hulu Plus. The objective is clear: get people into the Amazon ecosystem and keep them there (and happy). While the company didn’t produce anything similar to House of Cards on Netflix, it proved they’re in the game and serious about winning.
To coincide with the pay TV rumor, also rumored has been an Amazon TV set-top box, which would compete with Apple TV, Roku player, Google Chromecast, among others. The two rumors connect; they offer less value if only one of the two becomes real. Assuming Amazon can get the providers to license their content, this could be the holy grail for disrupting the TV industry, something that’s beyond necessary. This could bring in the first realistic deal towards an a la carte TV model, which TV companies hate because it would disrupt their lucrative cable deals and subsidizing of channels that very few people watch.
The big “but” here is that everything is either based on a rumor or a report. Amazon would benefit from a TV set-top box that offered users access to not only Amazon Instant Video, but also the Amazon store as well. Their website could easily be adapted for shopping on the big screen. Throw in an iOS and Android app that let’s those devises act as a remote, it could be a seamless experience.
Digging deeper, I think there could even be a big opportunity for a freemium-type model with their service. Rather than paying for content, give it away for free, but throw in advertising. I’m not talking about commercials, but rather goods that are sold on Amazon. While watching a show, let’s say an episode of Top Gear on the BBC (one of my favorites). At the bottom or side of the screen, in a somewhat translucent bar, could be an advertisement for automobile supplies: car wash soap, car cover, oil and filter, you name it. Taking it a step further, let some companies buy the ad space and tap into Amazon’s vast database of user data for some target marketing. Automakers could display ads and link to video or an interactive website, which a viewer could watch at that time or get taken directly to it after the show has concluded.
But what do I know?! I think, with a lot of resources, that could be the future of TV and content viewing. The same concept could be used for live TV, both network and cable. Pipe that content through an Amazon set-top box and the ad targeting could be incredible.
The story of TV has not been fully written. The market needs to be disrupted and it’s going to take a big player to make some waves.
