Saturday, October 27, 2018

Amazon, Content Suppliers Wrangle Over Prices

Amazon is looking to increase its cut of revenue from some subscription services available through Prime Video by 10 to 20 percentage points to as high as 50 percent, The Information reports.  

Amazon’s share from services such as HBO almost certainly parts with less of the gross amount of subscriber fees. Smaller and niche services might pay half of their sales to Amazon.

Amazon’s attention likely is focused on its share of revenues from channels that currently pay less than 50 percent to Amazon when a sale is made.

Disagreements about revenue splits are commonplace in the entertainment video business. That is especially true for streaming video services, which have difficult business model unless scale is obtained.

To be sure, garnering greater share of subscription revenue makes business sense for ecosystem partners when revenues are growing or shrinking. It matters not which way the trend is pointing.

And though the economics of linear and over-the-top subscriptions are quite different, the OTT model can make sense even for internet service providers who sell linear and OTT products. At a retail level, zero rating of video consumption, or big usage buckets, are necessary.

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