Hey Netflix, Did Amazon Just Pull a Coup?
The year 2013 may be a big one for Internet-streaming service providers and a bad one for traditional cable television. Rising costs have increasingly pushed American viewers to forgo their cable subscriptions in favor of high-speed streaming services, according to a 2012 study by the ISI Group. You can’t blame them. A 100-plus channel package can cost upward of $70 to 100 a month, while services such as Netflix (NASDAQ:NFLX) and Amazon’s (NASDAQ:AMZN) Prime cost approximately $8 per month or less.
Content is the main tie viewers have to cable. With Internet-streaming services, access to a varied selection of just-broadcasted television shows and recently released movies can be limited by the deals companies secure with content providers. Netflix is especially well known for its difficulties in securing enough new content to draw in subscribers.
But with Internet services becoming a more financially appealing option, cable networks must rethink how they license content. Amazon, in an effort to leave its competitors in the dust, has shown that the era of restricted content may be nearing the end. Recently, the company made the push to increase its library of videos, and it has even gone so far as to begin developing its own content.
And now, the Internet retailer has gained the rights to stream CBS (NYSE:CBS) show “Under the Dome” exclusively, beginning three days after the episodes are broadcast on television…
Amazon inked the deal, the first of its kind, with the media company on Monday. “Under the Dome,” a 13-episode television series produced by Steven Spielberg‘s Amblin Television, will debut on CBS on June 24, after which each episode will play on the network’s website, but only for three days. Then, the show will be available for subscribers of Amazon’s Prime Instant Video service.
“Adding a current season major network TV series like ‘Under the Dome’ to the Prime Instant Video library so shortly after its live airing enables us to increase our exclusive selection of great TV shows and give customers access how, when and where they want to watch it,” Amazon’s director of digital video content acquisition, Brad Beale, said in a statement.
The deal’s value to Amazon is obvious, though the benefits for CBS seem dubious at first look. But really, little will change for the company. Because episodes will be played on CBS.com for a while after the air date, the deal protects the three-day period when traditional television ratings are calculated for advertisers.
Then, once each episode transitions to Amazon, it has the potential to attract new viewers to the televised airings of the next episodes. Furthermore, the fee Amazon is paying to license the content will help offset the cost of making the series.