Did Amazon just save Over the Top Video with Prime and E-Books ?

No. But Amazon’s new prime streaming program did keep the slim prospect of Over The Top Video impacting traditional TV’s business on life support.

Netflix will be the first to tell you that streaming video is a complement to TV. You might even call it a compliment to traditional TV.  There isn’t much of anything on Netflix that hasn’t been on TV first. Brian Roberts was right when he said that what people today call Netflix content, everyone used to just call re-runs. That isn’t a knock on Netflix, we all love it for what it is. The worlds best DVD library at our fingertips.  But that doesn’t change the fact that everything was on TV.

There is a reason why its all re-runs.  No one in the online world has the balls to take the risks on new content that the TV world does.  Multiple pilots costing millions of dollars each ? That’s real money. Multiply that times the broadcast and cable networks that invest in real content and you have a hundred million dollars and more  a year being risked on new content. Then of course you have the hundreds of millions of dollars spent to promote all that content every year.  It takes a lot of money, luck and success before a tv show can get to the point that people bitch when they can’t watch it for free on the net.

Compare that to the TOTAL amount of money spent on original content destined first or exclusively for the net. What could the total cost of net original programming be every year ? Ten  million dollars ? Across thousands of websites ? It is bupkis compared to what happens in the TV world.  Which is exactly why the internet is no threat to traditional TV. There is no way to return those hundreds of millions of dollars that is spent just on NEW programming, much of which wont even see the light of day on TV .

HOWEVER, because Amazon entered the market, they just made it more attractive for those “re-runs” that haven’t made it to the net to re-consider placing their content online. Why ? Because up till now, deciding whether to put content online has for the most part been about partnering with Netflix.  Netflix does a great job of putting together deals, and as I have written in the past, they don’t buy on consignment, they pay money up front. But if the amount of money from Netflix wasnt enough to entice the content owner to take it online, it stayed on the shelf . Sheltered from Netflix and online streamers.

But now Amazon is  offering to pay for content. This is a critical step because now, when a content company off the net is considering whether to go online, they can now look at the total of Netflix and Amazon. Which just may be enough to get them to put their shows online. Amazon money plus Netflix money might just make it impossible for the owner of those TV reruns or movies to say no.

Amazon’s entrance might also be enough  to push Hulu and MicroSoft to take the same approach to content.

If there are 4 streaming media companies paying legit money for content, up front. Not on consignment. The dynamics of the industry start to change. It begins to present the net as a place that could maybe create a predictable enough revenue stream that it has to become part of the life cycle of all new TV shows. It becomes a revenue stream that is budgeted into future revenue streams and may actually keep shows in production.

And if its enough to keep shows in production, it may also be enough someday to become an exclusive destination.  There is no way Netflix can currently afford to pay to subsidize future seasons of Law and Order in the manner that Dick Wolfe is accustomed to . Amazon, Netflix , Hulu and MicroSoft splitting runs just like USA , TNT, Bravo and A&E might split Law & Order ? That could change things.

Having multiple players paying for content is absolutely what the streaming industry needed to let it hold on to that remote chance that it could actually have a real business built around cord cutters.

Which takes me back to Amazon and E-Books. We had a saying at Broadcast.com that bits are bits. They don’t care if they are music, video, text or even ebooks.  No matter what they are, because they are digital , the marginal cost of delivery is tiny.  What  could it possibly cost to deliver an E Book to a reader of any sort ? A millionth of a penny ? Its nothing. Nada.

So now that we know that the cost to deliver an E-Book is nothing. Let’s ask the zillion dollar question:

How long before Amazon does a Netflix for E-Books as part of Prime ?

Netflix in its brilliance helped content owners monetize their libraries. Their re-runs . All those shows and movies that were gathering dust earning bupkis. Who else has huge libraries of content that is gathering dust and earning bupkis ? Publishers. Book publishers to be specific.

Who is going to be the first to go to those publishers and offer the biggest publishers 10,20, 30, 50mm dollars for multiyear rights to freely distribute their books online to E-Readers ? How many readers of E-Books would gladly continue to be part of Prime from Amazon in exchange for the right to have any book in the Amazon E-library that is more than 1 year old and off the top 20 sales lists (the publishers arent going to give everything,  including new titles any more than movie  producers will) to read until they are done ? I think millions will.

Why not ? Download and read any book you want from our collection of 10s of thousands, maybe even hundreds of thousands. When you are done with it. “Return it” by simply deleting it from your library and pick another to read.  Read as much as you want as fast as you want. Add our kids subscription for another $1 per month. More than one kid, get one for each !

Bits is bits. There is no reason for Amazon to separate this from their streaming offering on Prime.

And then again, there is no reason for Netflix not to offer Netflix for E-Books is there ? They know how to model the content costs as well as anyone. They have the subscribers. They could include it or charge whatever extra to subscribers. Whatever they think works.

Or maybe google does it. Or someone else like the cable/sat/telcos as a value add to their TV subscriptions. Again, why not ? .

Bottom line is that it won’t be long before a Netflix or Prime for E-Books happens and takes hold. Someone is bound to do it. The publishing industry needs the money far worse than the movie industry did. Their monetization of their libraries is horrid. The kneepads are at the front door …..

The more monetization from each subscription (video/books/music ?), the more money available for content. Which increases the opportunity for more money to be paid by net content aggregators to creators of original content.

It’s only when the internet can compete for original content with traditional tv distributors  can the net be a true threat to traditional models.

The chances are slim and none, but at least slim hasn’t left town yet.


30 thoughts on “Did Amazon just save Over the Top Video with Prime and E-Books ?

  1. This year will see the beginning of migration to the internet of live tv. We have started an mfg. co to make servers that don’t fail and have 4x storage NO DATA LOSS=we will be the backbone for internet TV!

    Comment by carlsmoney -

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  3. M Cuban now on Shark Tank (hurrah!). What he doesn’t realize is that many of the ideas sent to the producers that they turn down are better than what they air (for example, ours). The producers are mainly looking for thinkgs that make good TV. If I were M. Cuban, I would sift through some of those Shark Tank entries the producers overlook. That’s the mark (no pun) of a real entrepreneur.

    Comment by genewizerep -

  4. Top stock picks

    Comment by alphaworksfr -

  5. Great ideas Mark and I agree.
    very impressive
    see my website at http://infobisa.blogspot.com/

    Comment by zeromain -

  6. Free books? Over here we have a name for that. We call it the library. 😉

    Comment by trip1ex -

  7. Yes. Can’t we just get a-la-carte programming at some point? MSO’s charging us for a bunch of crap programming we don’t want to get the few things we do is like greedy sports team owners charging us for pre-season games, psl’s and packages to get our season tickets. In the pound of filet you get a lot of fat.

    Counter to my own argument though, is that the smaller networks actually putting on good orignal programming like FX, AMC, HDNet would probably not have been able to, unless dragged along with the giants.

    Comment by edifyresearcher -

  8. Oh how I and millions like me long for access to everything I want or need to read or watch anytime I need or want

    Comment by hrcsacprotez -

  9. @Alec Rawls…. Aaaah, those rednecks, they’re everywhere 🙂

    Comment by tercumex -

  10. Adding to previous note:


    Comment by Morgan Warstler -

  11. Cable channels especially have found out that reality TV and reality TV like programming provide higher margins.

    Comment by wordpressming -

  12. People who finance anti-American films that inspire terrorists are moral shit.

    Comment by Alec Rawls -

  13. Hey Mark,

    Great article. I’d like to add an additional element to the conversation. Quality. Traditional content providers are in a race to the bottom to cut production and talent costs. Very few are actually still creating “multiple pilots costing millions of dollars each”. Cable channels especially have found out that reality TV and reality TV like programming provide higher margins. ABC, NBC, CBS have and will continue to focus much more energy on episodes like Dances with the Stars, minute to win it, etc… Which as you know is extremely cheap to produce compared to a traditional sitcom. Check out the cable ratings posted on 1/30 (excluding sports). Top 10 shows:

    Jersey Shore 2
    Jersey Shore 2B
    Walking Dead
    Tean Mom 2 Thurs
    Teen Mom II Tues
    Sons of Anarchy
    Burn Notice
    Beyond Scared Straight
    Real Housewives Atlanta
    16 and Pregnant 2B
    Pawn Stars.

    Of those we have 2 that are non-reality TV. Where are the “multiple pilots costing millions of dollars each” going? Cause they’re not showing up on my TV, and if they aren’t showing up on TV, they’ll stop being made in favor of cheap content.

    I believe the focus of cable and networks to lower production costs and focus on cheap TV is actually putting them in a position of weakness. Web only producers can create reality TV just as easy, if not easier. Web producers also have an opportunity to capture the displacement of the audience who are turned off by reality TV and the never ending shock cycle. Amazon, Hulu, Youtube, Netflix, MS, Apple are the future of TV. You can see it in action with Next New buy out and I wouldn’t be surprised to see the big boys start investing in premium production and content companies to close the loop. Especially for Apple it would be a perfect vertical integration. Next summer’s headline “Apple buys Disney”.

    Comment by adamlsmith -


    Comment by growhappy -

  15. Hi Mark, another site that I visit mentioned that you were in talks to do something with Charlie Sheen. http://social.entertainment.msn.com/tv/blogs/tv-buzz-blog.aspx?blog=2080&feat=00805269-3bcc-441a-abef-5d56fd11269d&GT1=28103

    I apologize for bringing it up here but I hope it is ok to do so because Mr. Sheen’s life is in question. Nobody should work with Mr. Sheen until he has taken a brain scan and then had a consult with a brain specialist over the condition of his brain.

    On another forum it was suggested that Sheen is on meth. Either way, there is not point in treating Mr. Sheen like a successful actor and businessman if his brain is hanging by a thread.

    Comment by alexlogic -

  16. INternet is the future of video delivery. The reason is folks like to watch whatever whenever.

    Cable is a pain compared to Netflix. Cable-on demand doesn’t cut it either. And cable is too slow and stodgy and controlling to win out.

    Now it won’t happen for $7.99/month like the cord cutters think. That’s what where cord cutters are mixed up.

    But don’t see why Netflix can’t get into the original content business like any other cable channel does. Don’t see why enterprising tv folks won’t bypass networks and cable and go directly to Netflix with a relatively low-cost show. Look at what AMC is doing. Obviously it has to start on a smaller scale.

    And look at all the failed tv pilots out there. Why aren’t on these on something like Netflix?

    Why not democratize this crap instead of having a few big wigs call the shots on what is shown and when it is shown?

    That’s why the internet will become the video delivery system.

    btw, look at ESPN on the Xbox 360. I don’t see why first run content won’t be on the internet in a watch whatever whenever format. Obviously the video quality is subpar, but time aka more cheaper bandwidth will take care of that.

    And really there is nothing stopping a cable channel from just going direct to consumers over the internet. And let customers watch their shows on hdtvs from their ATVs, Rokus, consoles, BR players, etc.

    LIke you said it is all bits. If cable wanted to save its business they should have delivered us free internet with our video subscription.

    Comment by trip1ex -

  17. Hey Benja’s, sorry to hear about your situation. I wonder if your name had been on the deed if you could have avoided the situation you appear to be in. I don’t know if one of my blogs can help you, but you might want to check out http://www.swarmthebanks.com.

    There are several dozen blogs listed with up to the hour updates when they post new blog stories related to home foreclosures and other home purchase and sale related topics. I can’t vouch for any of them but it might give you a starting point for doing more research on your situation.

    Comment by alexlogic -

  18. Great ideas Mark and I agree.
    On an unrelated note, my parents home is about to be sold via a trustees sale unless we come up with roughly Thirty k :v( We are going to be without a home, any ideas for some quick ventures for regular folk….

    Comment by benjas10 -

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  21. REMEMBER Jason Kilar, CEO of Hulu, was Amazon’s “Vice President and General Manager of Amazon’s North American media businesses, which included the company’s books, music, video, and DVD categories”. Exit strategy for him, or is this a case of his own monster coming back to bite him in the butt?


    Business Insider posed the question “Is Jason Kilar Trying To Get Himself Fired Because Hulu Can’t Raise Money?”

    Read more: http://www.businessinsider.com/jason-kilar-hulu-funding-2011-2#ixzz1FYeBdrjY

    Comment by TestShoot -

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  23. I want to add the effect of disintermediation.

    You are right that this move from Amazon means those at the top of the production chain will find Internet distribution more attractive. But it also opens up opportunities for people at the bottom.

    On the Internet it’s possible for a small content creator to cut a deal with the distributor directly, cutting out one or two layers of middlemen. This is especially true in writing apps, but I think soon it will also apply to video – bits are bits, as you say.

    The first big Internet only, gotta watch it hit may come from below and not above, just because of economics. It might be easier for a group making a show like lonelygirl15 to make a profit from streaming than it is for a big studio to do the same.

    It’s true that the small time player will not be able to take the same risks as a bigger player, but a multitude of small time players, each taking one risk, will add up to the same thing.

    Comment by brucemcl -

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  25. You make a lot of sense but the publishers aren’t exactly known for their sense. Random House just joined five other publishers in adopting an “agency” model for e-book pricing. This scheme isn’t limited to new best-sellers: digital versions of books five or ten years old are priced higher than the paperback version.

    For them, it’s about control and what you are proposing threatens that control.

    Comment by hisownfool -

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  28. Wow. Mark. You’ve pinpointed a zillion dollar question:

    “How long before Amazon does a Netflix for E-Books as part of Prime ?”

    Here’s another one. “After Amazon does Netflix for E-Books, how long before they figure out a way to control all that content with their next gen Kindle?” Lets call it… a Blaze. Here’s the scenario 1: Tired of reading Melville on the beach? No problem, stream Jaws into your color Kindle for (whatever$/model).

    Now here is the scary scenario: Tired of paying Comcast/Time Warner/etc? Tired of trying to technically solve the streaming video content/tv content/etc? NO Problem. Amazon has got you covered. Kindle blaze runs on pc/android/kindle devices, powers Televisions… streams books, tv, movies, video… anything.

    Amazon can go from a razor/blade model with their kindle/content to a lord of the rings model. If they can figure out content streaming – I can see a point where having a kindle would let you stream wirelessly to your TV. For the growing aged demographic, reading the latest on a 42″ screen would be appreciated. In lord of the rings fashion, the nextgen Kindle/blaze could one device to rule all of the bits… all of the content. Bits go out from Amazon, money rolls in. Amazon could reap many billions/zillions there.

    The world we live in… is an amazingly fast one.

    Comment by johnakerson -

  29. An excellent analysis, Mark. May I add that for every great digital breakthrough, there is a dark side that makes headway as well. In this instance, it was the securitization of home mortgages after the Glass Steagall Act was abolished in 1999.

    Suddenly, homeowners and their homes became digital streams of investment opportunities in which thousands of mortgages were sliced into several different investment packages.

    Unfortunately, everybody was too busy creating multiple versions of digital investments from the same groups of homes while nobody tracked if the investment opportunities were viable, legal, truthful, or duplicative. And money was being made so quickly that the drive to get more and more people into homes became the number one goal, whether or not the homeowner could afford the home became irrelevant to Wall Street because Wall Street made money on the deal, irrespective of whether or not the homeowner could make the payments long term, or not.

    Because of digital, almost anything can be seen as an investment opportunity if packaged properly. Not only did wall street create all kinds of digital investment schemes on the backs of homeowners, it then became easy to create investment schemes in which wall street also made money if the homeowners defaulted.

    Some of the investors that helped put Barack Obama in office used profits from these schemes to help elect Barack Obama, and that may explain why Mr. Obama is letting over a million homeowners lose their homes, any built up equity and their down payments.

    But then suddenly, huge checks will be written by the banks as “payback” for their crimes, yet it will pale in comparison to what wall street has already gained, and the money probably won’t make it into the hands of those who have already been harmed by possibly the biggest financial scam ever perpetrated on the world, nor will it “change” the way wall street does business. Digital has truly made the practice of financial terrorism as simple as one’s and zero’s.

    Go see the 2011 Oscar winning documentary, Inside Job if you want to know more.

    Comment by alexlogic -

  30. “Amazon has good news for Kindle owners that it wanted to share with them first. A post from the Kindle team on Amazon’s Kindle Community forum says that 14-day lending will come to the Kindle sometime this year.

    There is a catch: “Each book can be lent once for a loan period of 14-days and the lender cannot read the book during the loan period.””

    I imagine they’d take the same approach to movies you buy not yet available in IPTV window.

    Comment by Morgan Warstler -

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