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Why Amazon will be big at IBC2017

2 November 2016
Why Amazon will be big at IBC2017

It is an ideal show with which to herald Amazon’s arrival as a major TV player – if indeed it needed further trumpeting.

“The GAFA are coming,” warned WPP CEO Sir Martin Sorrell (pictured), in his IBC2016 Keynote, referring to the media ambitions of Google, Apple, Facebook and Amazon.

He highlighted the e-commerce giant as the key one to watch. “While all the focus is on Google and Facebook, the big one coming is Amazon,” he warned.

WPP represents, by Sorrell’s reckoning, between a quarter and a third of the total advertising media services market. On behalf of its clients WPP will spend $5.5bn with Google and another $1.5bn with Facebook this year. He would welcome Amazon as a serious challenger.

“Google and Facebook account for 76% of ad growth,” he said. “We will be supportive of Snapchat, AOL/Yahoo and others [in their efforts to grow their share of digital advertising]. A duopoly is not what our clients want.”

However, Amazon will represent a serious threat to legacy media organisations since it has the deep pockets to spend on new exclusive content. It will also give Netflix, runaway SVOD leader, a run for its money.

Juniper’s Digital TV & Video: Network and OTT Strategies 2016-2021 report predicts that revenues from SVOD services including Netflix and Amazon are set to grow from US$14.6bn this year to US$34.6bn in 2021 as consumers in more countries move to non-linear video consumption.

The world’s largest online retailer has already doubled the amount it spends on content this year in an effort to attract more customers to Instant Video, part of its wider Prime service. Original content plays a key role in converting free trials to paying subscribers and driving consumers to Prime.

For example, the company’s German division looks set to pick up rights to the second instalment of hit drama Deutschland 83, after original broadcaster RTL declined to recommission. German TV trade site dwdl.de reports that Amazon may also top that with a third series, Deutschland 89.

Amazon is also recruiting a head of programme commissioning in London, signalling its willingness to invest millions in more British productions, according to a report in the The Telegraph. The high-profile, London-based role will build on the eight series Amazon has so far commissioned in the UK, making it easier for British and European producers to deal with Amazon. Currently all its programme-making decisions are made in LA.

In order to differentiate itself from Netflix and Facebook and to prevent Apple getting in on the ground floor, Amazon is also believed to want to move into live sports.

A report from Bloomberg, suggests that the Seattle-based retailer is on the hunt for rights to a number of high profile sports events, including the French Open tennis championship, rugby and football games and basketball matches.

According to Bloomberg, Amazon has hired Sports Illustrated Executive James DeLorenzo to lead its sports division as well as YouTube Executive Charlie Neiman to manage sports partnerships and business development.

Such a move would tally with the company’s acquisition of encoding specialist Elemental Technologies a year ago to give it the basis to launch a live OTT solution.

Much has been made of the use Netflix has made of analytics – rather than conventional TV demographics – to determine content commissions and serve targeted recommendations to consumers. Arguably, Amazon has even more data about consumption habits based on purchase behaviour. Plus, it can make use of data culled from VOD service Lovefilm and movie and TV database IMDB, both of which it owns.

Data based on behaviour is arguably more precise than demographics, the theory being that if you have all this consumption data, you can market the right show to the right customer. The more programming that is inside Amazon’s app, the longer people are going to spend with the site.

In a recent advert simultaneously promoting The Grand Tour and Amazon’s connected TV stick Fire, Jeremy Clarkson launches a fleet of drones – surely symbolic of a pre-Christmas deluge of new subscribers signing to Amazon’s TV package.

Watch Sir Martin Sorrell’s keynote and view dozens of other IBC Conference sessions on IBC TV VOD.

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