It’s gearing up to be a busy New Year for Amazon. In addition to jumping into the travel booking business, the e-commerce giant is also expected to roll out a free ad-supported video streaming service which could present a serious risk to established players like Netflix and Hulu.
As you know, Amazon already offers a video streaming service although access is restricted to subscribers of its $99 Prime service that also includes free two-day shipping among other benefits. The rumored ad-supported service would be a completely different venture.
Amazon’s play wouldn’t be to simply steal viewers from the competition or earn a few extra bucks from advertising (although those would be nice by-products). Instead, as one source told The New York Post, the idea would be to lure in more users that they could eventually up-sell to Prime.
Converting a free watcher to a Prime subscriber would pad Amazon’s pockets through the yearly fee and by introducing them to their vast ecosystem, opening up the potential for residual income.
Prime was built around the concept of free two-day shipping but Amazon has bolstered membership over the years by adding several other perks to the mix.
While Amazon doesn’t disclose how many Prime subscribers it has, one estimate puts the number at around 50 million worldwide. Roughly half of those also use Amazon’s video service – or around 25 million people – according to one source. Netflix, in comparison, has 35 million domestic subscribers.
Amazon's ad-supported video service is expected to launch in early 2015.