Amazon won't be offering a standalone or premium subscription video service that isn't bundled with Amazon Prime's two-day shipping of retail goods from Amazon.com. Not now, not in the near future -- maybe not ever. The integration Prime offers across Amazon's product lines is simply too important to the company's whole business.
That's what Brad Beale, Head of Digital Video Content Acquisition at Amazon, tells GigaOM's Ryan Lawler. "The bundle of benefits that come with Amazon Prime make perfect sense to offer to customers," Beale said. "The way that Prime Instant Video is offered today -- we’re going to continue that approach at least into the near future."
Rumors of an imminent launch of a standalone streaming video service from Amazon, to compete directly with Netflix and Hulu Plus, have been swirling for weeks. But Wednesday's licensing agreement with Viacom came and went without a change to Amazon's model. This prompted Beale's conversation with GigaOM.
In January, I reported on rumors from industry sources and remarks from Netflix's Reed Hastings that Amazon was trying to secure exclusive content to launch a premium or standalone service. I argued then (and still believe) that this would make sense if Amazon were trying to lock in premium video from a pay channel like Starz, Showtime or HBO that insisted on having its content paid for separately from Amazon Prime -- per-subscriber, not as a lump sum -- like it is through cable providers and like Starz insisted in September when renegotiating its deal with Netflix.
So we can probably also assume from Beale's statement that no such blockbuster deals are on Amazon's horizon. That is, unless the retailer is willing to eat Starz's (or whomever's) per-customer fee, and the premium channel is willing to accept Amazon giving it away with Prime. It's unlikely, but not unthinkable -- after all, Amazon has been willing to treat loaned books as sales in situations where it didn't have rights for its Amazon Prime lending library for Kindle.
Ultimately, Amazon has an interest in bundling these services, whether streaming video, lending libraries or two-day shipping, trumps its need to make a profit on every deal. It's about promoting the full range of its wildly diverse ecosystem as a single product.
Amazon has exactly as much interest in securing regular shoppers as Target, monthly active users as Facebook, devoted superfans as Apple, and complementary services as Google.
Remember Amazon's long play with the Kindle Fire:
Amazon could try to blow away Netflix on content, by making a deal with Starz or HBO. Instead, they'll try to blow them away on price, offering mostly identical streaming content plus additional value-added services for a lower annual cost.
The more you stream television shows from Amazon Prime, the more tempted you are to buy and download movies from Amazon Instant Video that aren't on Prime. The more lending library books you read on a Kindle, the more books you buy on the Kindle. The more you use one Kindle, the more tempted you are to buy another Kindle device -- if not for yourself, then for the rest of your family. And if Amazon finally really does sell a 9-inch Kindle Fire, then you'll do even more reading and watching and shopping on that.
Finally, you're an Amazon customer in an Amazon household -- especially if all of those services help encourage you to buy more goods shipped in two days or less.
"Convenience is king," writes The Motley Fool's Amanda Buchanan, "and if history is any indicator of consumer shopping habits, Prime is the future." Amazon is our Sears Roebuck, our Walmart.
And as Buchanan points out, one major reason Amazon wants to double down on Prime is that it has plenty of hungry competitors, from technology companies like Google to brick-and-mortar retailers, who'd like to break Amazon's stranglehold on two-day nationwide shipping.
But still, Buchanan writes, Amazon has the advantage:
The fulfillment centers are just one piece to Prime's puzzle. And all the pieces matter.
