by Bill Snyder

Amazon takes aim at YouTube, Netflix via new video offerings

May 11, 2016
Consumer Electronics

Amazon this week unveiled its new Video Direct user-generated video service, a direct shot at YouTube, and it also upped the competition with Netflix via new, aggressively-priced streaming video offerings.

amazon logo
Credit: REUTERS/Leonhard Foeger

If you have an itch to share your video creations with the masses, but YouTube just isn’t your cup of chai, a new alternative now exists: Amazon Video Direct.

The service, which launched this week, lets amateur and professional videographers alike upload video content for free, and it offers a slew of distribution options. Video creators can choose to make their content available for free to anyone, offer video downloads for a fee, sell content via subscriptions, or place video behind Amazon’s Prime pay wall.

However, if content creators want to charge viewers, Amazon will take a hefty cut: 50 percent of the revenue earned from downloads and 45 percent of all advertising revenue, according to The Wall Street Journal, fees that are similar to YouTube’s revenue sharing arrangement.

Amazon all-in on online video

Initially, the audience for Amazon’s new service will be much smaller than YouTube’s user base, of course, and so will the revenue. But that’s beside the point. Online video is at the center of the technology world these days, and Amazon clearly hopes to dominate it as thoroughly as it owns Internet shopping. The new feature will also represent yet another way for Amazon to lure customers into its digital mall and scoop up data on their shopping habits.

Amazon already goes head to head with Netflix, the leader in so-called “over-the-top” video, by producing its own content, including two well received Amazon Original Series, “Transparent” and “The Man in the High Castle.” Amazon’s Prime Video service isn’t as well stocked as Netflix, but its collection continues to grow. Amazon offers a streaming-video-only service for $8.99 a month, as well, which is $1 less than Netflix will charge for its similar service starting next month.

Amazon also recently changed its policy on Prime. Today, Prime subscribers can use the service, which includes free shipping options and access to streaming video, for $10.99 a month, instead of having to opt for a yearly subscription that costs $99.

The monthly Prime subscription is a smart move by Amazon. It lets consumers check out the service and encourages people who want to binge watch a specific show to subscribe for just the time it takes to view that series — which is how I watched “The Man in the High Castle.”

Amazon also likely has another goal in taking on YouTube. People who upload or stream using Video Direct are, in essence, walking into Amazon’s online mall. The company will note their viewing habits, and before long those customers will see targeted ads based on Amazon algorithms. Customers who are on Amazon’s site to watch video might well be tempted to buy something. (As demonstrated by a recent presentation from Netflix’s leading data scientist, the company tracks your every move on its site, and all of that data is no doubt sliced, diced and parsed by powerful algorithms designed by frighteningly intelligent data scientists.)

[Related: Amazon Prime and the racist algorithms]

At the moment, no dedicated Amazon page for user-generated video exists, but you’ll very likely see one just as soon as enough video has been uploaded to make such a destination worthwhile.