Why Amazon would give away free streaming video to its Prime customers

I’m like the writer of this engadget.com post who says, “you can’t be too harsh on a service that comes for ‘free’ and just makes an already tempting offering even more appealing” when it comes to Amazon’s announcement today that its Prime customers (those who pay $79 a year for “free” shipping) will now be able to view free more than 5,000 videos from the company’s “streaming” service.

To me, 5,000 sounds like a lot, but considering there are 90,000 titles in Amazon’s Instant Video service, it represents just a bit more than 5% of its inventory and most of the free selection is equivalent to what you’d find in a bin of clearance DVDs at a grocery store.

But, again. I’m not one to whine about something that’s free — except, well, when it’s on the internet.

Amazon has a clear motive with this classic “free” give-away strategy that we’ll no doubt see explained in some future re-issue of Chris Anderson’s Free: The Future of a Radical Price.

Amazon, who without a doubt, has more customer data than any company in the world, has obviously determined that giving away old episodes of Dick Van Dyke to people who pay $80 a year for free shipping will at least entice their most active customers to search the company’s Instant Video inventory before checking out the alternative on-demand streaming options they’ve already paid for (in my case: Xfinity and Netflix).

Just look at the page Prime customers see that I’ve displayed at the top of this post.

There’s a nice big search box up there at the top of the page (on the prime real estate of a web page) where you can search all of the streaming video selections that Amazon offers.

But to limit search for “Prime Eligible” titles, you must seek out a little box on the left-hand navigation rail. (Okay. Maybe “seeking out” is a bit extreme, but it’s not located in an intuitive spot for search filter options.)

For the example above, I used a search for “Dexter” to see if Amazon’s free streaming service offers more than the first two seasons (which, through about 30 hours of previous research, I know are the only two seasons available via Netflix’ streaming service). Sure enough, Amazon has most of the past seasons — but none for free.

So, what does that prove? It proves that someone like me who thinks they can get something for “free” (as in, not paying more than I already have), will at least go search Amazon. And maybe, instead of watching a free Dick Van Dyke episode, I may pay $30 to stream another season of Dexter.

Thank you, Amazon, for making me feel special. Damn you, Amazon. You figured out another way to make me hand money over to you.

Bonus link: A chart on this post on PaidContent.org provides a side-by-side comparison of Hulu, Netflix, Apple and Amazon video services, including inventory and pricing information. Fascinating.

  • I have turned off Disqus to see if that is what was preventing people from commenting. Apparently it was.

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  • Yes, I can comment again! 🙂 First, I would just like to say “ditto.”

    Their Prime program is probably profitable, thanks to their shrewd negotiation tactics (from what I’ve read, they rival Walmart in their dealings). My guess is that they ran the numbers for free streaming – associated with a Prime account – and found that with customer acquisitions and increased purchases, they would break even or it would be worth the expense. Or even better, be profitable.

    Also, one of the things you didn’t mention is their storage and streaming technology. As you already know, they’ve built a web services empire with AWS. I can only imagine the savings they get by owning the delivery platform. Not to mention, Netflix uses AWS to deliver their content!

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  • Thanks, Jon

    The commenting issue is bothersome. I like Disqus and we have it running on other sites, but there’s something on this blog that’s getting hung up while loading that is not allowing Disqus to fully load. (Or, that’s my theory and I’m sticking to it.)

    Yes on Amazon’s AWS. SmallBusiness.com is hosted there.

    But here’s a geekish question. Akamai provides both Amazon and Rackspace with services that speed loading (and I assume streaming) to the user. If I recall correctly, a long time ago, Apple was an early investor in Akamai — maybe Microsoft was also. Who knows, maybe Amazon is, in a round about way, also using Akamai (and in a second-degree way, Apple) for some facet of its deliver platform. So, in the end, everyone competes with everyone else, while also be customers of them also.

  • Now that is interesting. So basically they’re all in bed with each other in one way or another.

    Regarding Disqus, I used my OpenID with it once, and it’s never quite worked well for me on any site since.