The ongoing disruption of the pay TV business by Amazon Prime Video Channels has further accelerated with the release of figures indicating that revenues have leaped from just $700m last year to $1.7bn this year before accelerating to an expected $3.6bn by 2020.
The stratospheric growth has been charted by BMO Capital markets which estimates that Amazon will pay out $1.2bn to channel partners such as WarnerMedia’s HBO; BBC/ITV’s Britbox and CBS All Access in 2018 alone - assuming it shares 70% of all subscription fees on average.
Amazon has profited from the unique scale it can bring to the business, via a global audience of 75m Prime Video subscribers, as well as eliminating barriers to subscribers by fully integrating channels within its existing payments infrastructure.
It is believed Amazon takes a cut of between 15 and 50% of the proceeds of channel subscription fees, reducing the profitability for media companies who could have sold the same content to customers direct and limiting their access to consumer data.
Despite these inherent disadvantages BMO analysts still believe that Amazon represents a more attractive prospect than other pay TV and internet services such as DirecTV Now, Hulu with live TV and YouTube TV.
Amazon recently communicated the pleasures of binge viewing with its first campaign with Droga5 London.