Amazon's best business model overshadows Hollywood's worst shows

Amazon is venturing further into the world of entertainment by becoming a major producer of video content. Its latest thriller series, "Citadel," offers viewers the opportunity to purchase items from the show, such as the protagonist's necklace or dress, directly from Amazon's e-commerce site. This move demonstrates Amazon's ambition to apply e-commerce techniques to the video industry.

While Hollywood insiders have been critical of Amazon's video efforts, citing lukewarm reviews and a lack of success in the American market, the company is quietly building a model for making streaming content profitable. Despite creative misfires, Amazon is leveraging its advertising capabilities and transforming its streaming app into a high-margin marketplace for third-party sales. By pairing its shows with its formidable advertising machine, Amazon aims to make streaming pay in two ways: through advertising and through selling viewers other companies' content.

Amazon's digital advertising business has disrupted the duopoly of Google and Meta. With its vast amount of customer data, Amazon can serve highly personalized ads and measure their effectiveness by observing viewers' subsequent behavior on its e-commerce site. Although Prime Video has been largely ad-free to maintain a premium feel, Amazon has started experimenting with commercials and is expected to introduce more commercial breaks in the near future.

Furthermore, Amazon is selling not only its own video content but also content from other streamers on its Prime Video platform. By offering a wide range of content, including high-profile shows and live sports, Amazon aims to attract viewers and increase their spending on other content.

While becoming a content landlord is not without its challenges, Amazon is carving out ways to generate revenue in an industry that often operates at a loss. Despite not dominating the awards scene or the top ten most-streamed shows, Amazon's chief goals in the video industry are for people to watch TV through its hardware, purchase content through its store, and view commercials served by Amazon advertising.

Overall, Amazon's foray into video production and its integration of e-commerce and advertising techniques have the potential to revolutionize the streaming industry and create a profitable business model.


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