Amazon's debut set to hasten Sky's decline

6:52 pm on 15 December 2016

Opinion - The debut of Amazon Prime Video will hasten Sky's decline, but it's good news for New Zealand consumers.

Jeremy Clarkson

Jeremy Clarkson - the star of Amazon's upcoming show The Grand Tour Photo: AFP

With little fanfare, online retailing giant Amazon launched its video streaming service in 200 countries today, joining Netflix in delivering movies and TV shows to Kiwis for a monthly fee.

This has been long expected and indeed could be seen as the first wave of expansion that will see Amazon have a true presence in this part of the world, complete with warehouses of merchandise in Sydney, its Prime flat-rate shipping subscription and the critically acclaimed Echo digital assistant for the home.

All of that is likely to come as the company's founder, Jeff Bezos, realises his vision to take it global.

But the worldwide debut of Amazon's video service is significant enough in its own right.

Like Netflix, Amazon is investing hundreds of millions of dollars in developing its own shows, including The Grand Tour, the Top Gear rival that's likely to get a lot of play over the Christmas break, particularly as Amazon enters the market with an aggressive deal offering six months access for just $US2.99.

Amazon and Netflix are plowing money into developing their own content so that they are not reliant on Hollywood movie and TV studios and the restrictive licensing deals that need to be signed in dealing with them.

There have been a few duds from both streaming services so far - Netflix will have taken a bath on Marco Polo, its elaborate historical drama that it cancelled after its second season. But there have been hits in the form of House of Cards, Making a Murderer and Narcos.

In the streaming game it is all about adding paying monthly subscribers and on that front Netflix is doing well - at the end of September it had around 87 million subscribers.

Amazon is growing faster and will have over 76 million subscribers by the end of the year, benefiting from the ability to bundle flat-rate shipping, music, video and even e-books and magazines into one subscription.

Amazon joins Netflix, Spark's respectable Lightbox service, which broadband customers get for free, and Sky's Neon video streaming offering, which at $20 a month is the most expensive stand-alone streaming service on the market. It is fair to say that Sky's enthusiasm for streaming is tepid at best, as was evidenced yesterday when the pay TV operator lowered its earnings outlook for the year to June 2017 by 5-7 percent.

It blamed stiff competition in the streaming market for falling subscriber numbers and Amazon's arrival will only exacerbate that. The pain could get even worse for Sky. Currently it has a cosy relationship with HBO, which makes some of the most popular shows on TV, including Game of Thrones.

But HBO is looking increasingly vulnerable as its big rivals Amazon and Netflix experience success going direct to viewers. How long before HBO follows with its own streaming service in New Zealand and Australia, making Sky's premium Soho channel less attractive?

Sure, Sky has sport, and the America's Cup will give it a bump next year. But for the rest of us drama-looking TV watchers, the game has changed and there's a wealth of content now available that no longer comes with a hefty monthly bill.

Peter Griffin is the founder of the Science Media Centre, the editor of Sciblogs, and a technology commentator for RNZ and the Listener.

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