Amazon is partnering with Airtel to offer affordable streaming services in India. This is not really a new playbook. What is new here, strategically, is that Amazon has truckloads of money to pay Airtel for the users. If you look at it, the competition has shifted from pure contents to distribution. In the pure analog world, “content is king”, but in the digital space, besides the content, you need superb distribution as digital makes everyone local and global at the same time, shaping the order of competition. Why? In a world of unbounded supply, made possible by the web, people want the least friction for whatever you want them to use.
Accelerating its efforts to increase access to high-quality entertainment for every Indian, Amazon on Wednesday introduced Prime Video Mobile Edition – a mobile-only plan at an amazing introductory price of 89 rupees. India becomes the first Amazon Prime country in the world to offer customers a mobile-only Prime Video plan.
Powered by affordable data, the ubiquitous smartphone has become the country’s preferred screen for entertainment. Prime Video Mobile Edition is a single-user mobile-only plan, providing SD quality streaming to customers which is created especially for a mobile-first country like India. Prime Video is collaborating with Bharti Airtel (“Airtel”), India’s premier communications solutions provider, for the first roll-out of Prime Video Mobile Edition.
Amazon understands one thing since it has been running the ecommerce juggernaut: if you win the marginal cost game, you will live to define the ordinance of the game. And sometimes, winning means staying behind in the first half, as losses grow with scale, and then recover in the second half. Unfortunately, only those who have money can lose money! Amazon has piles of it – and wants to build a rapid user base in India by literally turning off mobile data meters as people indulge in shows and movies.
That brings me to Netflix and MutiChoice’s video-on-demand streaming service, Showmax. If they stay there frozen and Amazon comes into Africa, and strikes deals with MTN and Airtel to pipe shows and movies across the content, Amazon would be an immediate category-king.
The fact is this, while there is a clear differentiation on European football and the Nigeian equivalent, most users will not think twice if they do not need to pay more for data, on Amazon platform, when compared with competitors. The cost of data is the major cost of streaming video on demand, and if that is well managed, customers will come in droves.
The final steady state of video consumption in the near future would be online. So even DStv is not protected if Amazon could buy sports distribution rights in European capitals and pipe the contents via the web. If that happens, DStv will experience market dislocation to hold its current subscribers. Simply, the idea of making distribution cheaper as Amazon is doing in India, if executed in Africa, will lead to new leaders in the African market.
As in ecommerce, anyone who can figure out distribution in SVOD will win a big part of the opportunity in Africa. Amazon understands the mechanics of distribution cost and the associated impacts, on market positioning, and broad competition.
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