Posted by Yaffa Finkelstein on December 14, 2011
Written by James Bell, Pay OTT TV Blog
Pay OTT TV is increasingly being seen as an effective way for operators to extend their existing services, increase ARPU and reduce subscriber churn. However, can other companies leverage existing billing relationships with subscribers/end users for profitable pay OTT TV services across devices?
Amazon has clearly recognised the opportunity Pay OTT presents and now offers unlimited online streaming to US subscribers of its Prime service. Consumers who pay $80 a year to use the Prime package are eligible for a host of benefits including free Two-day shipping on items, access to the Kindle ebook lending library and now unlimited streaming of thousands of movies and TV shows which they can consume across multiple devices, including connected TVs and Roku boxes.
The advantages to offering Pay OTT streaming as part of a wider package are obvious. It is all about increasing brand loyalty and ARPU by giving the consumers all the services they want in one place. Offering online streaming of films and TV as part of the Prime subscription is a clever way to increase the level of interaction users have with the Amazon site, which in turn will lead to an increase in sales.
The lure of online video streaming is clearly working for Amazon; statistics suggest that anyone who joins Amazon Prime spends roughly double in the following year. Most importantly, in an increasingly connected and mobile society, consumers are able to do all of this on the move.
With the recent launch of the new Kindle Fire tablet – a hopeful rival to the iPad – Amazon will be looking to hook users of the Kindle Fire into the Prime package much in the way Apple have successfully done with their iTunes store.
Amazon offer part of their video library to Prime users for unlimited streaming, but they also provide the ability access a range of extra paid for content that can be bought individually on top of the subscription, an example of how combining different Pay OTT TV business models can provide additional revenue generation.
Although Amazon has been in the US online video game for a while and they may struggle to compete with the likes of Netflix in terms of content offerings (though that’s set to change), what Amazon Prime proves is that Pay OTT TV can be used effectively as a tool to enhance services and increase ARPU, whether that be for a pay TV operator or an online megastore.
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