Amazon (s AMZN) has aggressively grown its Prime Instant Videos service over the past year, more than tripling the amount of content available to subscribers since launch. And as Amazon continues to add more content to Prime Instant Video, there have been speculations that it could introduce a service not tied to its Amazon Prime offering. But that’s probably not in the cards — at least not in the near term — according to the company’s top video content acquisition exec.
Today, access to its streaming video service comes bundled with Amazon Prime. But some rumors have emerged lately, suggesting that Amazon could unbundle the service and offer it as a standalone competitor to Netflix (s NFLX) or Hulu Plus. That includes a mention from Netflix CEO Reed Hastings, who wrote in a letter to shareholders that he expects Amazon to introduce the service and price it below Netflix’s own offering.
But Brad Beale, Head of Digital Video Content Acquisition at Amazon, said in an interview Wednesday that the company is unlikely to break out the video subscription offering anytime soon. “The bundle of benefits that come with Amazon Prime make perfect sense to offer to customers,” Beale said. “The way that Prime Instant Video is offered today — we’re going to continue that approach at least into the near future.”
Even before adding the video component, Beale said that Prime was an incredible value. The offering provides free, two-day shipping to customers who pay an annual $79 subscription. We’ve believed for a while that adding video could entice some customers to sign up for Amazon Prime who might otherwise not have — and once they’ve paid the annual subscription fee, they’re likely to take advantage of the free shipping. In that sense, video could be seen as a loss leader for driving more physical retail sales.
There’s also the fact that having a free subscription service could help boost transactional sales through Amazon’s VOD and electronic sell-through offering. While Prime Instant Video has 15,000 titles for free viewing, it doesn’t have many of the latest new release films or in-season TV episodes. For newer content, Amazon offers more than 100,000 titles for rental or purchase. So an Amazon user who got hooked on older seasons of Downton Abbey or Sons of Anarchy on the free service might convert to being a paid user to watch the current seasons of those shows.
As Amazon adds content, it’s also looking to boost awareness of what’s available on the service. That includes placement of a letter from Amazon CEO Jeff Bezos on the site’s homepage, letting the millions of users who stop by every day know what new content is available from Amazon Prime. That kind of promotion is driving awareness and usage, Beale told me. As more customers learn what’s available, and as Amazon continues to improve the offering with even more content, he expects customer adoption to grow even more.