Switched On: Amazon’s Puzzling Prime Directive
Apple makes its money by selling devices. As such, it’s incentivized to have content — or at least the delivery of it — exclusive to its devices. For years, the company implemented DRM (digital rights management) on music sold through iTunes. It fought such restrictions, but nonetheless benefited from them. Even today it proclaims its leadership position in the number of applications available for its platforms; many of these arrive on the iPhone exclusively, at least for a while.
Netflix, on the other hand, makes its money selling content subscriptions. As such, it’s incentivized to have its content available on all suitable devices that consumers use. Indeed, the streaming company has covered an unmatched number of displays. One can access the service from PCs and Macs; iOS, Android and Windows devices; nearly every connected TV and Blu-ray player; major game consoles; Chrome devices; TiVo; and Apple TV. The Roku broadband video box began as a product that ran only Netflix.
Netflix is even available on the Kindle Fire, the tablet from its closest competitor in the broadband video subscription service in the US. While Netflix is generally believed to be far ahead of the service from the online retailer, Amazon is fighting hard. It’s signing distribution deals, producing original content, adding metadata via X-Ray and even allowing downloads of some titles on its Kindle Fire HDX.
Amazon Prime Video is available on iOS devices in addition to its Kindle Fire tablets, but unlike other Amazon apps like Kindle and its music store, it’s not available on other Android tablets or phones. While one could dismiss Android tablets, noting that Amazon already covers a lot of that ground with the Fire, it’s tough to ignore the penetration of Android phones, particularly such hot-selling devices as Samsung’s Galaxy S series. This is not an installed base like Windows Phone, where an app developer could rationalize abstaining by citing low share. And even if Amazon were to launch its own phone — as it’s rumored to be preparing to do — it would only be able to gain a small part of the addressable market in the next few years even if it was very successful.
So, is Amazon a device company that wants its service available as an advantage to its devices? Or is it a content-distribution company that wants its content broadly available?
So, is Amazon a device company that wants its service available as an advantage to its devices? Or is it a content-distribution company that wants its content broadly available? Judging from Jeff Bezos’ comments, the company doesn’t make much money when someone buys a Kindle device, but does when someone uses it. (“Using” in this case meaning “buying content.”) But there would be even less of a barrier to using that content if Amazon made it available to tens of millions of people who could easily access it if only Amazon would make some user interface tweaks to what is already an existing Android application and make it more broadly available.
There may be one other wild card to Amazon’s reluctance to make Prime Video more broadly available. The company has been rumored to be working on a television add-on. Much as Apple TV fits into Apple’s iTunes store and iOS devices, such a box (or dongle) — which would compete with Apple TV, Roku and Chromecast — would presumably work seamlessly with the Kindle Fire and potential Amazon phones. As Amazon’s hardware ambitions grow, it will have to weigh a unified user experience at the price of choice and flexibility — a quintessential dilemma faced by companies such as Apple, Google and Microsoft.