Slowly but confidently, Amazon is building a library of television shows and movies to rival that of Netflix, much to the satisfaction of media companies like Time Warner and CBS, whose executives love to see the competition.
Although Amazon will not unveil its own original television shows until the fall at the earliest, it is spending hundreds of millions of dollars to have the exclusive Web rights to shows it can brag about on its Amazon Prime streaming service, like “Downton Abbey,” from PBS, and “Falling Skies,” from TNT.
The latest example came on Monday, when Amazon announced an unusual arrangement with CBS, the country’s most-watched television network, to carry episodes of “Under the Dome” just days after the series makes its debut on TV in June.
“This deal is yet another sign that the streaming marketplace is becoming more and more robust,” said Scott Koondel, the chief content licensing officer for CBS, a position that was created two months ago. “Advances in user-friendly technology from companies like Amazon and Netflix are a boon for premium content owners.”
Amazon has a long way to go to rival Netflix in terms of TV and movie selection. But in some corners of the media business, it is already perceived to be Pepsi to Netflix’s Coke. And many other companies — among them Google, Sony, Intel and a new joint venture between Redbox and Verizon — are trying to come up with a Red Bull or a Snapple they can call their own.
While Netflix has won attention for unveiling a high quality show, “House of Cards,” on its streaming service, “it is increasingly hard to ignore the progress Amazon has made in a relatively short amount of time,” Richard Greenfield, an analyst at BTIG Research, wrote two weeks ago. He predicted that Amazon would quietly spend more than $500 million on video this year.
Amazon declined to comment on that figure. Its nearly two-year-old streaming service, called Prime Instant Video, is bundled as part of its $79 annual Amazon Prime membership, which also provides two-day free shipping and a monthly Kindle e-book rental. The company says it has millions of Amazon Prime subscribers, but it will not disclose the precise number. Netflix has about 27 million streaming subscribers in the United States.
Instant Video started simply enough about two years ago, with relatively cheap acquisitions of older television shows from networks like CBS and nonexclusive rights to older films from studios like Universal. But Amazon’s recent deals have revealed the company’s ambitions.
When Netflix dropped the rights to some cable series like “Pawn Stars” last fall, Amazon swooped in and started streaming them. When Time Warner wanted to sell streams of some of its cable dramas, Amazon bought the exclusive rights to “The Closer” and “Falling Skies,” while Netflix bought “Dallas.”
“This emerging back end for cable originals is a very promising sign,” Jeffrey L. Bewkes, chief executive of Time Warner, told investors last week, “since it should result in production values for cable originals getting even better over time.”
Perhaps its biggest deal yet came last week, when it clinched the rights to past and future seasons of the PBS hit “Downton Abbey.” By July, “Downton” will be gone from Netflix.
Both streaming services mine the data of their users to determine what kinds of shows to license, and what not to. The first two seasons of “Downton” were the “most-streamed TV show on Prime Instant Video,” said Brad Beale, who oversees video acquisitions for Amazon, so it was a “pretty easy decision” to bid for seasons three and four (and five, if it is produced).
“Data is a great proxy for what our customers love,” Mr. Beale added in a telephone interview. “We’re blessed to have a platform that gives us a lot of insight into what our customers love.”
“Under the Dome” — based on the Stephen King novel and produced by Steven Spielberg’s Amblin Television — will be unique because each episode will go onto Amazon four days after its premiere on TV. CBS stands to make more money this way than it now does by streaming shows on CBS.com and attaching ads.
Analysts expect to see more such deals as broadcasters move away from the free online model made popular by Hulu. Hulu has a subscription component as well, but it has not announced any notable licensing deals the way Netflix and Amazon have done. Its owners are at odds over the future of the service, and its founding chief executive, Jason Kilar, will leave later this winter.
Netflix says it expects to compete with Amazon the way HBO and Showtime compete — with TV dramas and comedies of their own. “When it comes to competition, we not only have a superior content offering due to our larger budget, but we are further along the experience curve,” Netflix told investors last month. In other words, Amazon is cheap, off-brand Cola.
While Netflix has four more original series on tap this year, Amazon is trying out test episodes of six comedies and five children’s series. This year, Amazon will stream them and, after hearing from viewers, decide which ones will become series.
Roy Price, the head of Amazon Studios, said the pilot process will ensure quality, just as it does for traditional television networks, and make viewers and producers pay attention to Amazon’s video projects.
“All that matters is being great,” he said. “There’s no great benefit in being good; people don’t change their habits for good.”
Article source: http://mediadecoder.blogs.nytimes.com/2013/02/11/amazon-and-cbs-announce-deal-on-rights-to-under-the-dome/?partner=rss&emc=rss
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