To compete with Netflix, Amazon should just spin out Prime Video as a standalone service

Internet giant Amazon pulled off a major coup yesterday when it announced it had secured the rights to create a new original series starring Jeremy Clarkson, James May, and Richard Hammond — the former presenters of Top Gear, a hit BBC TV series about cars.

The news also left Netflix — which had hoped to grab the trio as well — shaking its fist at an Amazon dust cloud. Yes, a giant chunk of the video-streaming market was left with a bitter taste in its mouth, but such is the nature of a healthy, competitive market. You can’t win them all.

However, there was one facet of the news that caused concern–how, exactly, was Amazon planning to broadcast the show to the same 300 million+ global viewers who have hitherto tuned in to Top Gear?

The problem is, Amazon is claiming the series as an Amazon Prime Video exclusive, a service only available to Amazon Prime subscribers in the U.S., U.K., and Germany. Netflix, on the other hand, is available across most of the Americas, Europe, and Australasia, and it would’ve been simple for Netflix to tap the global masses, and even tempt a few million Top Gear fans on board in the process.

An Amazon spokesperson confirmed with VentureBeat yesterday, however, that the show will indeed be available to “hundreds of millions” of fans globally, but stopped short of saying how Amazon will make that happen.

Accessibility

A report in the Wall Street Journal suggests that Amazon will simply license the series out to local broadcasters in markets where Prime video isn’t available — which is most markets. That would probably be the simplest solution, and it could prove lucrative when you consider the BBC made around $230 million in revenue each year from Top Gear.

Though the licensing option may make sense for something like the upcoming Top Gear spin-off, Amazon won’t always have the luxury of such a marketable, big-name brand to wave in front of local broadcasters. So this might not be a solution for other content.

An alternative includes Amazon opening its $99 / year Prime subscription service to additional markets, thus making Prime Video available to more consumers. The problem with that, however, is that for each market Amazon enters with its Prime Video offering, it has to negotiate rights with the respective content owners. And that can be a complex process if it’s to offer an extensive range of programs.

Another answer could be to simply spin out a separate streaming service for Amazon Original programs — this could be a subscription, pay-per-series, or a combination.

Though there’s nothing to suggest this is what Amazon intends to do, the notion does give us food for thought. Should Amazon just go ahead and create a standalone video subscription service, similar to Netflix?

Spin-out

As with Netflix, Amazon has been edging further into original content territory, taking on big-name stars such as Woody Allen, and now the stars of what is was one of the world’s most-watched T.V. shows, Top Gear.

It’s clear that Amazon is using its content acquisitions, including Original Series, as carrots-on-a-stick to lure customers onto its Prime subscription. That much makes sense. But bundling the video element with a broader service that offers everything from music-streaming and two-hour grocery deliveries to online photo storage and a book-lending library muddies the marketing waters and can make it a harder sell.

Netflix, on the other hand, is a dedicated video-streaming service that specializes in offering TV shows and movies. That is all it has to do, and it’s easier for Netflix to build up that brand.

The Amazon video experience also feels like it lags behind Netflix at times. On the Web player, your attention is constantly being grabbed by other ecommerce options available through Amazon, such as “Today’s Deals,” “Shop by Department,” and “Gift Cards.”

Moreover, the company doesn’t even have a proper Android app yet for its streaming service — you have to download an app from the Amazon Appstore, which in turn enables video-streaming from within the main Amazon shopping app. That’s nuts, and all that before we even mention the lack of Chromecast support.

Then there’s this. Amazon also offers an on-demand streaming service called Amazon Instant Video, which kind of exists alongside Prime Video, except you pay per title and you have a much larger selection of movies and TV shows to choose from. And anyone can use it — not just Amazon Prime subscribers.

The point is, compared to Netflix, Amazon’s video offering is a little messy and can be confusing. It needs to be simplified.

Amazon vs. Netflix

Though the companies come from different roots, both Netflix and Amazon have emerged as fierce competitors in the online video-streaming realm.

Founded in 1994, Amazon began life as an ecommerce platform with a focus on books, but soon branched into everything from DVDs and pencils to grocery deliveries, cloud-computing services, and video-streaming. Launched in 1997, Netflix began as an online DVD-rental company, but it has successfully evolved with the times and is now one of the major players in video-streaming.

But Amazon seems determined to pull ahead, having paid an eye-watering $250 million to obtain the exclusive rights to the new 36-episode TV show, according to a report in yesterday’s Financial Times.

If this number is correct, it would be among the all-time highest figures a digital-streaming company has paid out for a show. For context, Netflix is thought to have paid around $100 million for two 13-episode seasons of the popular House of Cards.

Between them, Netflix and Amazon have garnered an increasing number of accolades that were traditionally reserved for movie studios and production companies.

Back in January, Amazon walked away with the top TV comedy gong at the Golden Globes for Transparent, the first online series to win a Golden Globe. Kevin Spacey also emerged triumphant at the same ceremony, securing the top actor (drama) award for House of Cards — a Netflix production. The previous year, Netflix nabbed seven Emmy awards, four more than the year before. And it also won its first Oscar, for a documentary short.

Amazon and Netflix are no longer limited by their role as platforms for third-party content providers — in the big push for differentiation, they have had to embrace original content.

While it’s clear why Amazon has hitherto bundled its video-streaming service with the broader Prime subscription, times have changed. And now it might just make sense for Amazon to spin the video element out away from all the distractions and hullabaloo of its other offerings.