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Amazon.com: From Retail Powerhouse to Multimedia Monolith?

Written on
Apr 16, 2014 
Author
Peter Koeppel  |

ADOTAS – Since its inception, Amazon.com has been known as one of the first highly successful, “big box” retailers online – and while it is still one of the “big boys,” times sure have changed.

Fortunately, Amazon is taking steps to change with those times. With physical products like books, CDs and DVDs disappearing, Amazon is trying to find ways to stay relevant with its audience, continuing to offer every product under the sun with convenience and ease and build relationships through using the very media that its audience wants.


Streaming media and higher prices may be the shape of things to come at Amazon as the online retailer takes steps towards competing more directly with Google and Netflix. With the success of its streaming licensed and original programming through the Prime service, the company is facing important decisions in order to become a true multimedia powerhouse.

Amazon’s TV service. Currently, Amazon’s TV service is limited to purchases made through their digital library, or through a streaming service through Amazon Prime. In the last year, Amazon has spent $1 billion on acquiring content and producing original programming for its Prime streaming service. However, the company is considering an advertising-supported streaming television and music video service. In a plan presented to potential partners, Amazon would offer original and licensed content – including shows it has co-produced, like “Betas” starring Ed Begley Jr. In addition to the television shows, the proposed service would also include free music videos with advertising, served up on the retail website.

Despite all the speculation, however, an official Amazon spokeswoman has said that “no such plan was in the works.” While Amazon has a video advertising business that offers programs like “First Episode Free” and ads associated with game and movie trailers, the streaming television channel is not part of Amazon’s immediate plans.

An Amazon Smartphone? Recent Amazon-related reports have the company coming out with a smartphone in the fall, and say a June announcement is coming. These reports detail the new handsets, citing features like multiple front-facing cameras and a 3-D viewing experience. If this is the case, certainly there will be lots of differing opinions out there as to whether Amazon is going too far beyond its area of main expertise by offering more of its own hardware. This addition to the mobile market – if indeed it comes to fruition – could be both exciting and a potential game-changer in the crowded and competitive world of smartphones.

Amazon Fire. For the time being, the company is definitely focusing on Amazon Fire TV, an HDTV connected device that can stream over 200,000 episodes of TV shows and movies, millions of songs and hundreds of games. Amazon Prime users can also use the device, which retails at $99.00, to gain access to media available on Prime – including popular titles like “Downton Abbey” and “Under the Dome.” In addition to content from Amazon, the device will also stream Netflix, Hulu and other top media libraries.

Featuring voice search and a quad-core processor, Amazon hopes its new set-top box will become a major player in the field of streaming home media. While the price is in line with Apple’s Apple TV, current competitors Google Chromecast and Roku offer similar services for less ($35 and $50, respectively).

Amazon Prime. Both the potential streaming TV service and Fire TV set-top box rely on Amazon’s Prime service. With it, customers get access to a free streaming library, as well as unlimited two-day shipping and other perks. While the price has remained at $79 annually for almost a decade, Amazon is having to make a shift. The company announced it will raise the annual price of its Prime shipping and streaming video service by $20 to $99, the first price bump in nine years.

The Seattle-area retailer said the 25-percent increase was necessary to offset increased delivery and content-acquisition costs. The $99 price took effect for new members on March 20. Existing Prime members will pay the higher rate when they renew.

What about Amazon shipping? Shipping costs have been a particular concern for Amazon as it is in the process of building more warehouses closer to urban centers and expanding its same-day delivery options for customers. Shipping costs alone increased by 29 percent last year to $6.6 billion. Despite the higher costs, analysts say they expect fewer than 10 percent of the more than 20 million Prime members will drop their accounts.

By increasing Amazon Prime costs and offering new streaming services, Amazon is poised to become a powerhouse multimedia player. It’s a far cry from the click-and-mortar superstore that was established years ago, but as the giant known as Amazon.com has shown, its fire (no pun intended) for opportunities has become inextricably integrated into the consumer experience.





Peter Koeppel is Founder and President of Koeppel Direct, a leader in direct response television, online, print and radio media buying, marketing and campaign management. With a Wharton MBA and over 25 years of marketing and advertising experience, Peter has helped Fortune 500 companies; small businesses and entrepreneurs develop direct marketing campaigns to increase profits.

Peter started Koeppel Direct in 1995 and has built it into one of the leading direct response media-buying firms in the U.S. Follow me on Twitter.

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