December 10, 2015
Amazon just began offering some enticing add-ons for its Prime members: on-demand programming from Showtime, Starz and other channels, for as much as $8.99 a month. The goal is to lure more consumers to become Prime members, a $99 a year program that offers unlimited two-day shipping among other benefits, since Prime members spend more money on the site than non-Prime members. The add-on channels can be accessed via Amazon’s apps on mobile devices, streaming boxes and connected TVs.
The Wall Street Journal reports that, with this move, Amazon has “caught up to Hulu,” which unveiled a Showtime subscription at the same price. Amazon executive Michael Paull notes that the on-demand services would “simplify customers’ lives.” “The current ecosystem is too complicated with too many apps to navigate,” he says.
Starz and Showtime appear to be the two most well known channels to be made available; WSJ lists other, more obscure offerings including Shudder, Gaia and Urban Movie Channel.
Although Amazon will not disclose the financial terms of the deal, sources say that the company has struck “varying deals to share revenue with the on-demand services it has signed up.” The company is paying Starz and Showtime a wholesale rate similar to pay-TV providers. But, says Starz chief executive Chris Albrecht, “a rule of thumb has always been that new distributors don’t get the same rate that old distributors got.”
Amazon may bundle channels in the future, say sources, but “for now the company seems focused on signing up providers to offer a la carte subscriptions.”
WSJ notes that, “Amazon’s announcement Tuesday seemed aimed as much at persuading content providers to participate in the new program as it was selling the service to Prime customers,” as the company promoted how it would take over customer acquisition, billing and customer-service costs for its Streaming Partners Program.
If Amazon can persuade cable and broadcast networks to offer on-demand content, WSJ continues, “that could give customers who cancel their traditional cable packages, or cut the cord, another option in the expanding streaming-TV world.”