Amazon launches premium service Prime in India

By: | Published: July 27, 2016 8:21 AM

With the launch of its subscription programme Amazon Prime, Amazon is gearing up to bring Prime Video to the country.

The Prime subscription programme of the US-based Amazon is basically aimed to woo customers with free one-day delivery as the ecommerce firm looks to stay ahead of competitors like Flipkart and Snapdeal.The Prime subscription programme of the US-based Amazon is basically aimed to woo customers with free one-day delivery as the ecommerce firm looks to stay ahead of competitors like Flipkart and Snapdeal.

With the launch of its subscription programme Amazon Prime, Amazon is gearing up to bring Prime Video to the country. Amazon Prime will be available in over 100 cities in the country.  Through Prime Video, Amazon will provide access to its original content including various drama series such as Hand of God and Mad Dogs, besides television content that the e-commerce company aggregates from TV broadcasters.

The Prime subscription programme of the US-based online retail giant is basically aimed to woo customers with free one-day delivery as the ecommerce firm looks to stay ahead of competitors like Flipkart and Snapdeal. Under it, it will offer free one-day and two-day deliveries to ‘Prime’ members in over 100 cities, as well as early access to its exclusive offers, as it aims to build a base of loyal customers in the country.

Prime Video, which will include Amazon original TV series and movies besides other Indian and global content, is expected to be launched as a part of this service later.

“While in the US, Prime was initially launched to provide convenience in terms of shopping online; today the service is popular for its original video and music content,” said Jehil Thakkar, head (media and entertainment), KPMG, a consulting firm.

With this, Amazon will make an entry in the video over-the-top (OTT) space in India. The video OTT space in India currently has 20-30 players, including broadcaster-run platforms such as Hotstar owned by Star India and Viacom18’s Voot, in addition to third-party video streaming apps such as Hungama, VuClip, YuppTV, etc providing aggregated as well original content. Not to mention, early this year, Netflix launched its services in India.

Greg Greeley, vice president – worldwide, Prime, Amazon Inc,who did not mention a date of launch, said that the ecommerce firm is already in conversation with various local content producers to add local language content.
There are three kinds of OTT platforms in India. Free-to-use OTT platforms earn from advertising, while companies such as Netflix and Amazon Prime earn from subscription. The last model — called a ‘free-mium’ model — is a combination of free and premium content. Under this, a platform earns from advertising for free content and charges a subscription fee for premium content.

According to a Ficci-KPMG report, the size of the digital advertising market in India stood at Rs 6,000 crore in 2015. Of this, Rs 1,200 crore came from online video advertising in 2015. Currently, Google’s YouTube walks away with the lion’s share of the revenue from video advertising. Media observers say that with the digital advertising rate being as low as Rs 1-2 cost per view (CPV) and subscription-based apps gaining users at snail’s pace, monetisation has remained a challenge.

“While it has taken other video OTT players time to create a core base of consumers, for Amazon it will be a lot easier thanks to the ecommerce business it runs,” explained Thakkar.

Compared with Netflix’s basic pack in India that starts from Rs 500 a month, Amazon Prime is available at an annual fee of Rs 999. The ecommerce company is currently selling the subscription of Prime at an introductory fee of R499.
“The entry of companies like Amazon Prime and Netflix validates the potential of subscription lead business model,” said Ekalavya Bhattacharya, chief strategy officer, ALT Digital Media, the digital media arm of Balaji Telefilms. Balajji Telefilms which will be launching subscription-based video OTT platform ALT soon.

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