Amazon’s Global Push Creates Direct Competition with Netflix

Amazon launched its global Prime Video service, pricing it under Netflix to compete in the subscription-video arena. This year, according to Cowen & Co., Amazon is on track to spend more than $3 billion on Prime Video content, compared with $6 billion by Netflix. In addition to its Amazon Studios originals, the program line-up for its international Prime Video offering will include hundreds of movies and TV shows, varying by country. Licensed movies include “Jurassic Park,” “Pulp Fiction,” “Gone Girl” and others.

Variety quotes Amazon Studios vice president Roy Price, who is also global head of Prime Video content that, “We’ll still look at a deal that is checkerboard, but we’ve shifted focus primarily to global [licensing] deals.” Prior to launching globally, Prime Video was available in the U.S., U.K., Germany, Austria and Japan.

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Price notes the challenge in going global. “You can have a global service, but there are no global customers — there are only local customers,” he said. “It takes some thought and some localization.” Amazon Prime Video’s promotional price is $2.99 per month.

With regard to localization, Amazon is licensing or producing some specific content: Bollywood titles in India, anime, Korean dramas, among other genres. “We already have a robust production pipeline in Japan and India, where we have independent development teams,” said Price. “We’ll grow [content] over time based on what people respond to.” While he wouldn’t comment on how much Amazon is paying for “The Grand Tour,” industry estimates range from $160 million to $250 million.

The Wall Street Journal notes that now, Amazon Prime Video is everywhere but China, “a country whose regulatory environment has proven tough for foreign streaming services,” including Netflix. Price notes that, “the video service could give Amazon a foothold to expand its core retail business overseas by introducing its Prime membership services down the road.”

“It’s easier to put a server in a country than a warehouse, but over time we may follow up with retail around the world,” said Price, who adds that the program was recently launched in China, “bringing the number of countries where it is available to a dozen.” After the Amazon Prime Video’s six-month promotional price runs its course, international streaming will cost $5.99 a month “in most places.”

Netflix is now available in 190 countries and charges $7.99 a month, similar to its U.S. price, “despite having a slimmer library of offerings outside the U.S.”

Ampere Analysis reports that Amazon’s “global rollout likely will lead to higher costs — potentially in the range $4 billion to $5 billion in annual outlays on video.” The company’s investments in video, faster shipments, warehouses and other services “caused Amazon to miss Wall Street’s profit expectations for the third quarter.”