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Lots of people will write smart things about Amazon’s strategy with Metro-Goldwyn-Mayer, the film studio that Amazon bought for $ 8.45 billion. But I want to ask a more basic question: why?
Not why Amazon is buying MGM, which owns the rights to James Bond and RoboCop. Presumably, Amazon will use it to dismantle ideas for new series and films for its Prime Video streaming entertainment service. No, I ask: why does Amazon have a streaming video service in the first place?
Is video a valued Prime member benefit or a billion dollar vanity project for Amazon?
On the rare occasions that Amazon executives have discussed their goals for Prime Video, they have focused on the power of loyalty. They say adding a video service to Prime is another reason for people to stick with Amazon’s membership program and feel like they get a good one from both parcel shipping at no extra cost and “Bosch” on demand Value received. My colleague Karen Weise reported that, according to Morgan Stanley, households with Prime membership typically spend $ 3,000 a year on Amazon, more than twice as much as households without membership.
According to Amazon, Prime Video users are more likely to renew their membership every year or pay when they participate in free trial programs and buy more products from Amazon. However, in his new book on Amazon, journalist and author Brad Stone suggests that this may not be entirely true.
He writes that some Amazon employees who worked in the entertainment department analyzed how many Prime members were watching shows and then renewed their Prime membership or signed up. “There was little evidence of a connection between viewing and buying behavior,” writes Stone. “The truth was, Bezos wanted Amazon to do TV shows and movies.”
The divergence between the stated goals of Prime Video and the perhaps more pedestrian-oriented reality underlines a dichotomy between Amazon and other technological superpowers. They are so rich and successful in some areas that they can afford to beat in others.
Amazon’s success in online shopping and cloud computing – and most importantly, its fans and critics’ belief that the company is a powerful and disruptive genius – has documented Amazon’s questionable strategies when it comes to food and streaming. And it has reduced the urgency to fix a clunky online shopping experience that we can’t always trust and that feels like it hasn’t been updated since the 1990s.
The extremely profitable advertising businesses of Facebook and Google support their inability to figure out what to do. Well, almost everything else these companies are involved in including Facebook’s efforts to make WhatsApp a business and Google’s years of struggles with online shopping. I don’t know whether to find it comforting or frightening that these companies are crazy smart and sometimes stumble in the dark at the same time.
On Prime Video, we don’t hear Amazon executives justifying the cost or showing their worth to Prime members. The lure of fast and free shipping might be enough. Or would Prime members be more loyal if the company offered a variety of perks – such as free internet service, online fitness classes, access to personal buyers, or more Kindle books? Walmart’s version of Prime offers discounts at some gas stations.
I don’t know if any of these alternatives are convincing, but I also don’t know that video is a tempting add-on to Prime. Only Amazon really knows and it says nothing.
Chances are that Amazon is playing a very long game with Prime Video. I can envision a future where Amazon will use ads on Prime Video and its other online video sites to get us interested in new products and then sell them to us as well. Amazon would span the life of the purchase from “huh, this looks interesting” to clicking “buy”. (Stone suggested this possibility in a recent newsletter.)
Or maybe I’m falling into the trap of assuming that there must be great design behind what Amazon and other superstar companies are doing. Maybe it’s just cool to make films.
Before we go …
There are a number of internet innuendos in India this year. On Wednesday, WhatsApp, owned by Facebook, sued the Indian government over new internet rules requiring “traceable” messages, which WhatsApp said violates the Indian Constitution. Prime Minister Narendra Modi’s party also hit Twitter for adding a warning sign to party leaders’ tweets containing forged documents intended to smear opposition politicians.
Related topics: Russia is pressuring Google, Twitter and Facebook to delete posts the government deems illegal or restore Kremlin-friendly material, Adam Satariano and Oleg Matsnev reported. As in India, Poland and Turkey, Russia’s campaign is an example of how governments are testing how far they can go to control language online.
The eagerness of cybersecurity companies to promote their services alarmed criminals. Research by ProPublica found that cybersecurity companies may inadvertently contribute to ransomware attacks by posting bugs in the software of criminal gangs, including those that recently hit the east coast’s largest fuel pipeline.
Artificial intelligence software is no smarter than humans but … Machines beat archaeologists in the arduous task of categorizing ceramic fragments, wrote my colleague Heather Murphy.
Otter in a hot tub. (OK, it’s actually more like a cold pool, but this otter webcast is in Twitch’s Hot Tub category.) Read more from Polygon about this Vancouver marine mammal rescue center and its live stream on Twitch.
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