There has been a tremendous transformation of the video technology from black and white movies to today’s latest technology of smartphones that live stream from all over the world. This transformation has fundamentally changed the way we consume videos.
Nowadays, creating video content and watching it on demand has become the standard. One of the largest and most popular video platform of the world is YouTube. The content on this platform was offered initially by amateur filmmakers, who shared scenes about their hobbies or important moments in their life. Surprisingly, the described user-created content achieved a popularity that back in the day was only reached by rock stars or famous actors. The audience reached by some of the most popular Youtubers today are millions of Users. As an example, the most popular Youtuber “Pewdiepie” has 48 million active subscribers that love watching him playing computer games. With him and other content creators, YouTube counts an astonishing number of 1.3 billion monthly visitors. This resulted in revenue of $9bn in 2015. The secret to the success of Youtube are undoubtedly many factors, e.g. Google as parent company, but especially the sheer number of content satisfies literally any curious video consumer. Gaming, Cooking or Make-up tutorials are just a few keywords that offer an exhaustive number of user generated content for everybody on this video platform.
In the same time not only user created videos were on the rise, but also Hollywood content found its way on the internet. One of the most popular platforms nowadays, where you can find your favorite movies is Amazon’s streaming service, Amazon Prime Video.
The business strategy of Amazon is different from Youtube. The company began to first make movies available online to be rented or purchased and later added a streaming service. This strategy showed to be fairly successful, considering that Amazon’s core business is not video streaming but retailing. Interestingly enough, Amazon went one step further than its competitors by diversifying its strategy and adding a service that allows semi-professional creators to upload and monetize their own content on Amazon. The emphasis here lies on the content being created by neither total amateurs, nor Hollywood level video creators. This way Amazon lets people post videos to the so called Amazon Video Direct and earns money from advertising and other sources, putting the business in direct competition with YouTube. Given that Youtubers like the above mentioned “Pewdiepie” are hugely successful, placing a bet on user generated content as cornerstone of the video streaming business is definitely a promising business endeavour.
In the future it will be interesting to see how both services, Amazon and Youtube will evolve. Analysts predict a steady rise in revenues for Youtube over the next years, whereas Amazon and its competitors only predict moderate growth. Netflix, for example achieves growth by expanding internationally, whereas Amazon has yet to do the same, as they are only operating their video services in 8 countries as of now.
Group 36
(Jan Holst, Hendrik Hagedorn, Lukas Hirsch, Prabjot Jawanda)
