Amazon drives 25% of US streamer sign-ups as it pushes to own the TV experience
Amazon is promoting rival streamers as it aims to make Prime Video a one-stop entertainment destination ahead of Netflix and YouTube.
Amazon has built a big business by letting people easily subscribe to a wide array of streamers from HBO Max to Hallmark+ — via its "channels" program — and it's leaning into it as it seeks to beat other tech giants in becoming the default destination for TV watching.
Execs at Amazon underscored the point Wednesday at Prime Video Engage, an annual gathering it created last year to court its channel partners. Notably for the usually press-shy Amazon, it also invited a handful of reporters to the event for the first time.
Amazon presented data from Antenna, an independent third-party measurement firm, showing that sign-ups through Prime Video channels accounted for 25% of major US subscription streamer sign-ups in the first quarter, up from 22% two years earlier. About half of sign-ups are direct, and the rest come through app stores and other marketplaces like Roku's and YouTube's.
Albert Cheng, who leads the Prime Video business at Amazon and presented at the event, emphasized that the marketplace is a collaboration between Amazon and the distributors. "Today we're here to demonstrate our ongoing commitment to this unique business; to offer concrete examples of how our successful partnership fuels your business growth," he said in a blog post.
Amazon's channels business scored two big coups when HBO Max rejoined in late 2022 after a hiatus and Apple TV+ came on for the first time in October. However, Amazon is still chasing holdouts like Comcast's Peacock and Disney's streamers.
Amazon sees the channels program partly as a way to increase engagement with its platform. Prime Video captures only around 3.5% of TV watch time, trailing Google's YouTube, Netflix, and Disney's combined streamers, according to Nielsen. (Viewing of partners' content via Prime Video is included in that figure.)
It's also looking to its channel sales to help it toward its goal of making Prime Video profitable in 2025. Amazon takes an undisclosed cut of revenue from subscriptions sold through the program, which varies by partner.
Netflix, meanwhile, is also racing to become the default TV viewing platform and announced a deal last week to make France's linear channel TF1 available to members there. YouTube is trying to build a channels business similar to Amazon's, but several streamer execs told Business Insider it has a long way to go to seriously take on Amazon.
In Amazon's presentation, it addressed the elephant in the room — whether being on Amazon could cannibalize a streamer's business — head-on. Antenna shared case studies of streamers that gained subscriptions when they went on Prime Video, drawing an analogy to Nike, which lost ground to competitors when it stopped selling on Amazon for five years.
Warner Bros. Discovery's HBO Max lost an estimated 5.1 million subscribers after it left Prime Video in 2021, then gained 3 million through Amazon's channels in the first three months after it returned in 2022. Just 16% of them were existing HBO Max subscribers, per Antenna data.
Antenna shared similarly rosy results for other streamers, concluding that, overall, nine out of 10 Prime Video Channels sign-ups would not have occurred if the services weren't on Prime Video. In the case of Apple TV+, Prime Video is driving 9% of its subscriptions as of March.
What Amazon's partners say
Channel terms vary by partner, but two told BI that, for them, the cut of subscription revenue they took home was over 50%.
The partners described Amazon as a good overall partner that had become more generous in sharing data with them about who's subscribing and what they're watching and had been giving them more promotional real estate (which the partners pay for).
As with any platform relationship, incentives aren't always aligned, though. The marketplace has gotten more crowded, with upward of 150 channels competing for subscribers, which makes it harder for individual streamers to stand out. Amazon makes it easy for users to unsubscribe, which contributes to cancellations.
Partners also readily admit they're getting access to subscribers who would otherwise be expensive to find elsewhere. Still, they said they'd welcome Amazon getting some competition from YouTube.
Amazon's channels have created some unease at the company
Amazon's channels effort shows how it's taken a different approach to entertainment than pure-play media companies like Disney and Netflix.
Most Prime Video viewers watch it as part of a bundle of services that comes with their $139 a year Prime membership rather than as a stand-alone subscription. It's fed by originals from Amazon MGM Studio like "Lord of the Rings" and "Reacher," as well as Amazon's channels partners, TVOD (titles available to rent or buy) offerings, and free, ad-supported (FAST) channels.
The rise of the channels business has created some unease at MGM Studios. Some insiders told BI they questioned the company's long-term commitment to making its own big-budget entertainment, a concern that was heightened late last year when the prestige fare of Apple TV+ came on the service. Many of the shows that get top billing on Prime Video's homepage aren't Amazon originals.
Amazon has also scrutinized its entertainment spending, along with other areas. In 2024, it laid off several hundred employees at Prime Video and Amazon MGM Studios. Jen Salke, the head of MGM Studios — who was associated with lavish spending on projects like "Citadel" but few huge hits — left in March and hasn't been replaced.
Amazon still spends on originals, but it — along with other media companies — is also shelling out more for live sports like NFL and NBA rights and licensed content.
Sports programming has helped fuel Prime Video's ad business. The streamer made ads the default for all Prime Video users in early 2024, shaking up the video ad marketplace and contributing more to Amazon's advertising revenue. EMARKETER expects Amazon's ad revenue to cross $66 billion this year and reach over $78 billion in 2026.
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