Amazon Channels Debuts In UK & Germany, To Offer Live TV

Amazon.com, Inc. (NASDAQ:AMZN) yesterday launched Amazon Channels, its live television programming in Europe.

Amazon Channels will offer on-demand as well as live programming from third party broadcasters to Prime Video subscribers in the UK and Germany. They will now have the option to choose from 40 different channels without subscribing to a bundle or contract. Some television networks whose content will be available on Amazon Video include Eurosport, Discovery and ITV (LON:ITV), among others.

This is the first time that Prime members in Europe have an option to pay for only what they wish to watch. Price per channel will range from £1.49 ($1.94) to £9.99 ($12.98).

We note that Amazon’s stock has underperformed the Zacks Internet Commerce industry over the last one year. Its share price has appreciated 37.2% compared with the industry’s gain of 46.7%.

Despite this underperformance, we believe there are a lot of factors that could turn the wheels in favor of Amazon. These include expansion of Prime, its grocery initiatives and efforts around AWS. The company capitalizes on its execution strength, robust performance and technological prowess.

Is it a Threat for Pay-TV Providers?

Yes, to some extent. Pay TV providers like Sky and BT (NYSE:BT) usually engage customers with large, and often an expensive bundle of channels or make them enter long-term contracts. To date, customers in the UK and Germany did not have much of a choice.

But now with Amazon giving them this freedom, the scenario is about to change. It is not only competing with pay-TV operators but actually challenging their existence. It will be interesting to see if pay-TV providers can come up with counter strategies.

The move puts Amazon in direct completion with Facebook (NASDAQ:FB) in Europe, which is making some heavy investments in live video. Notably, Amazon’s video streaming rival Netflix (NASDAQ:NFLX) has no plans to offer live TV.

Amazon.com, Inc. Revenue (TTM)

The Prime Push Continues

Amazon has been increasingly pushing advantages to Prime members in its bid to attract more users and generate increased sales. Amazon Channels is already doing well in the U.S. and its expansion to Europe makes sense as Prime saturation in the U.S. is apparent, owing to the company’s high penetration rates.

Amazon has been making some notable moves in video, entertainment and TV, indicating diversification from its core e-commerce business. The company’s current focus is on building video content, primarily for Prime subscribers because the growth prospects in the market are considerable.

To Conclude

The increasing popularity of tablets, smartphones and web-connected TV has enhanced online-video viewing and continues to attract consumers as well as leading technology companies.

Amazon is leaving no stone unturned to boost its digital media sales and attract new viewers. Moves like this expand Amazon’s video portfolio outside the U.S., thereby boosting its international presence. If Amazon could repeat its domestic success internationally, there is scope for further growth.

Currently, Amazon is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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