Amazon Launches YouTube-Like Video Service
May 10 2016 - 9:40AM
Dow Jones News
Amazon.com Inc. is intensifying its rivalry with Alphabet Inc.'s
Google with a new ad-supported video service that resembles YouTube
by letting anyone upload clips.
Beginning Tuesday, Amazon account holders can upload original or
their own licensed videos to the new Video Direct service, the
Seattle-based online retailer said. Such users can designate
whether their videos are free to everyone, available to rent or
own, offered through a subscription channel, or behind Amazon's
$99-per-year Prime paywall.
The new service broadens Amazon's effort to transform itself
from a dominant retailer to a multimedia powerhouse, which now
offers big-screen movies and TV series from the likes of Woody
Allen.
Amazon has been bulking up its streaming video offerings with
original content and exclusive deals with providers such as HBO and
Epix. Last month, Amazon dialed up competition with Netflix Inc. by
offering its streaming video service as a month-by-month
subscription that is a dollar cheaper than its rival.
Now it once again has Google in its sights, a fierce rivalry
that spans online shopping, cloud-computing storage, same-day
delivery and consumer devices.
Of course, Amazon faces an uphill battle if it wants to create
an able competitor to YouTube, which has a decadelong head-start.
More likely, Amazon aims to capture new users through the free
video service and convince them to buy Prime subscriptions, content
for their devices or additional merchandise through its namesake
site.
"Think of this like a Trojan horse to bring you into the kingdom
of Amazon, which is a massive shopping mall," said Peter Csathy,
the chief of consulting firm Manatt Digital Media Ventures. "It
really underscores how video has become the battleground in
tech."
Amazon has studied ways to get more streaming video onto its
site, including a program it considered two years ago to offer
ad-supported streaming television and music videos.
"We're constantly looking for ways to enable content creators to
find an engaged audience and to make it easier for customers to
discover great content," said a spokeswoman.
With Video Direct, Amazon says it is targeting "creators and
storytellers," giving it a cheaper way to stock up on
professionally made video than purchasing licensed content. The
company spends about $3 billion annually on streaming video
content, according to Wedbush Securities analyst Michael
Pachter.
It has won accolades for some of its television series,
including "Transparent," which explores transgender issues in Los
Angeles.
Still, YouTube is the dominant force for user-generated video
and offers ad-supported music videos and even feature-length
movies. This year it introduced a paid subscription service that
eliminates advertisements and includes some exclusive content.
YouTube is expected to make nearly $2 billion in U.S. video-ad
revenue this year, claiming about 20% of the market, according to
eMarketer.
Amazon said it will keep 45% of revenue it takes in from ads
appearing during free broadcasts, which matches YouTube's
arrangement. It will also keep 50% of revenue from channel
subscriptions and video purchases or rentals. For ad-free Prime
videos, the company will pay content holders 15 cents for each hour
of streamed in the U.S. and 6 cents overseas.
Similar to how merchants sell on the Amazon.com marketplace, the
new Video Direct service will be open to anyone, though the company
can block videos with content it deems inappropriate. Amazon said
it will filter out videos with inappropriate content, such as those
with hateful speech or pornography, using a combination of software
algorithms and human screeners.
The Direct Video service is launching with videos from toy maker
Mattel, media conglomerate Condé Nast Entertainment and Web
publisher Mashable, among others.
Amazon will make the video available through its video app on
mobile devices, set-top boxes such as Roku, or on its website.
Write to Greg Bensinger at greg.bensinger@wsj.com
(END) Dow Jones Newswires
May 10, 2016 09:25 ET (13:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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