Amazon.com’s Prime Video Channels business, which allows customers to subscribe to third-party video streaming services, will generate $1.7 billion in revenue this year, up from $700 million in 2017, according to a BMO Capital Markets report cited by The Hollywood Reporter.
What’s unclear from the report is whether that’s a gross number, before Amazon pays the entertainment companies that own the streaming services their share of the subscription fee, or a net number. As we have reported, Amazon keeps at least 30% of the subscription fee for Amazon Channels, although it has been looking to raise that share.
Amazon made an interesting decision a few years ago when it decided to go a la carte with its streaming services offering, rather than launch a skinny bundle of channels like YouTube has. So far that decision has proven wise as many skinny bundles are losing money. The channels offering, on the other hand, should in theory be a high margin business.
Assuming the ecommerce giant shares on average 70% of the subscription fees, Amazon will pay out $1.2 billion in 2018 to Prime Video Channels partners — ballooning to $2.5 billion in 2020, the firm’s analyst predicted.
“We believe [Prime Video Channels] is a material driver of standalone [over-the-top] subscribers for many entertainment companies,” representing anywhere from 25%-45% of total OTT users depending on the channel, BMO analysts Daniel Salmon and William Lowden wrote in the report.
In the U.S., Amazon’s Prime Video Channels currently provides a selection of 156 channels. Those include CBS All Access, WarnerMedia’s HBO, Cinemax, and Boomerang; Lionsgate’s Starz; PBS Kids and Masterpiece; Viacom’s Noggin and Comedy Central Now; Hallmark Movies Now; Lifetime Movie Club; Tribeca Shortlist; BBC/ITV’s Britbox; CuriosityStream; Cheddar; and AMC Networks’ Urban Movie Channel, Acorn TV, Sundance Now and Shudder. All movies and TV shows included with the subscriptions are available to watch on-demand, and many channels also provide live-streaming feeds.
