Traditional TV and cable subscriptions have been declining for years, with streaming services constantly converting consumers. Amazon (AMZN 2.64%) has meanwhile grown its streaming business to include almost every facet of digital entertainment available. Therefore, the company could be the ones convincing people to finally cut that cord.
A one-stop digital shop
Cord-cutting is a worldwide trend that has seen millions of people leave their cable and satellite TV services behind for cheaper streaming options. From 2019 to 2021, US cable providers lost about 6 million subscribers, with cable and satellite companies losing 25 million users since 2012. On the same subject : 13 Best 2022 Travel Size Sunscreens You’ll Need on Your Next Vacation. Analysts predict that the industry will lose another 25 million subscribers by 2025 as more people opt for digital TV options.
Meanwhile, Amazon Prime Video maintained a 19% market share of the streaming industry in 2021 and the first quarter of 2022, the second highest share behind Netflix (NFLX 8.20%), whose share is in decline. Amazon started its digital video business with the launch of Prime Video, then Amazon Unbox, in 2006. Its original purpose was to allow customers to download movies. However, the success of Netflix and technological advances led the platform to shift its focus to streaming in 2011. It started with a library of 5,000 streamable movies and TV shows that have seen exponential growth since then.
Prime Video is now home to a variety of entertainment services, such as buying and renting content, a streaming library of original and licensed content, live sports, and third-party channels. The platform has seen Amazon create a space that is very different from its biggest competitors, such as Netflix, HBO Max, and Disney +, whose platforms are relatively one-dimensional. Prime Video is an entire ecosystem built to satisfy almost any video entertainment need a Prime member might have.
In addition, Amazon Channels was launched in 2015 and is perhaps the biggest sway for people to drop off their cable subscriptions. The service allows Prime members to add to popular channels that have increased in popularity with traditional cable providers, but can now be streamed directly via Prime Video. Prime members can choose from about 150 different channels to add, typically ranging from an extra $ 0.99 to $ 14.99 / month. Some popular options include HBO, Showtime, Starz, Comedy Central Now, and PBS KIDS.
Cost-effective
As the world continues to feel the effects of the pandemic and geopolitical events, the cost of living is rising worldwide. Many cut discretionary spending, with entertainment to go first. Netflix experienced this firsthand, with a loss of 200,000 subscribers in Q1 2022, but Amazon Prime membership has gone up. Read also : ‘Apocalypse Now: Final Cut’, ‘Basic Instinct’ In Lineup As Streamer Studiocanal Presents Launches On Prime Video. US Prime membership has increased from 142.5 million in 2020 to 151.9 million in 2021, 58.2% of the population.
As most U.S. homes seem intent on keeping their premium subscriptions, Amazon has the ability to offer attractive entertainment options that do not require a separate service or membership. A 2020 report found that the average cable package cost $ 217.42 / month, more than the average combined cost of utilities (electricity, gas, water, sewage, and waste), which came to $ 202.50. For 44% off, or $ 120 / year, Prime offers a whole host of additional services, from free two-day shipping on Amazon to music and of course Prime video. People can use the difference to add more Amazon channels and still pay significantly less. Last Prime Day even saw several channels, like Starz and Showtime, sell for $ 1 / month for two months.
The biggest pull for cable right now is live sports, an aspect of entertainment that Amazon is constantly growing in prime video. Subscribers can already add channel for access to professional leagues with MLB.TV, NBA League Pass, NBA TV, and La Liga TV.
However, to increase its sports options, Amazon made an 11-year deal in 2021 to pay $ 1 billion a year for exclusive rights to 15 Thursday night football players throughout the NFL season and one game during the pre-season to air each year. Initially to begin broadcasting in 2023, the historic deal now allows players to appear on Prime Video in 2022.
What to look out for
As cable and satellite subscriptions go down and Amazon Prime memberships continue to grow, consumers will increasingly see the benefits of the switch. Read also : Meet the Cast of Prime Video’s New Reality Show ‘Forever Summer: Hamptons’: Foto. A good indicator of where the market is going is not only prime subscription growth, but also traditional cable providers financial statements.
For example, most of Comcast’s (CMCSA 3.33%) business is “cable and communications”, accounting for 53% of revenue. Meanwhile, its media division includes revenue from its Peacock streaming service and is its second largest division with 19%. However, from Q1 2021 to Q1 2022, media revenues increased by 36.3%, while cable communications revenues increased by 4.6%. As this trend continues and Amazon only grows its offerings, the company could make a big profit.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of Motley Fool. Dani Cook has no position in any of the listed shares. Motley Fool recommended positions in Amazon and Netflix. The Motley Fool recommends Comcast. The Motley Fool has a revelation policy.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of the board of directors of Motley Fool. Dani Cook has no position in any of the listed shares. Motley Fool recommended positions in Amazon and Netflix. The Motley Fool recommends Comcast. The Motley Fool has a revelation policy.
