Amazon wants to launch a new streaming service in Germany soon. It’s called “Freevee” and is completely free – but users have to accept advertising for it. Not only does the mail order company put competitors like Netflix under so much pressure. He also shows what the streaming of the future could look like. An analysis by Anna Schmid.
The service has actually been around for years – but only in the USA and Great Britain. Now comes Amazon Freevee (formerly: IMDb TV) also to Germany, as several media report unanimously. Relatively unspectacular in itself, Amazon had announced this step years ago.
However, the company has now announced that it intends to significantly expand its range of in-house productions. According to a report by “The Verge”, the range of content that cannot be found in the competition is to be expanded by a full 70 percent.
A fact that is likely to put pressure on Netflix, Disney and other companies. After all, all films and series can be accessed free of charge on Amazon Freevee, users only have to endure one or two commercials.
Amazon Freevee: Ad-supported, but completely free
In times when everything is getting more expensive anyway, this is probably a real alternative to expensive streaming subscriptions for many people. Especially since the market is becoming increasingly frayed: Most users not only have a subscription, but also use Netflix, Sky, DAZN or Disney Plus in parallel.
Marcus Kleiner from the SRH Berlin University of Applied Sciences believes that Amazon is posing new challenges to Netflix, Disney and other streaming services with the Freevee push. Especially because of the announced original offensive: “In-house productions give the platforms their color. They are often the reason to take out a subscription,” says the media scientist in an interview with CHIP.
In addition, exclusive content is expensive. That means: only those who have the financial background can afford the elaborately produced originals. “Amazon has numerous mainstays thanks to its cloud universe structure: mail order, music streaming and Amazon Prime Video are just a few examples,” says Kleiner. He sees “massive competitive advantages” in this, especially compared to Netflix.
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Because the company has focused almost exclusively on streaming in recent years. Platforms like “Netflix Games”, on which users can access games for series like “Stranger Things”, were more of a marginal product until recently.
The streaming top dog, summarizes expert Kleiner, lacks additional financial pillars. That could increasingly become a problem – especially in view of the sobering quarterly figures. While Netflix actually expected 2.5 million new customers, the customer base shrank by around 200,000 subscribers in the first quarter of 2022.
In the second quarter of 2022, the streaming top dog expects an even bigger slump. Around two million people could cancel their paid subscriptions, so the fear. It is therefore not surprising that Netflix wants to take stronger action against unauthorized account sharing in the future. This was announced by COO Greg Peters after the quarterly figures were announced. It is estimated that around 100 million households worldwide use the streaming service without paying.
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Netflix no longer rules out ad-supported subscription models
And the company no longer rules out an advertising subscription model. CEO Reed Hastings said such an offer “could make a lot of sense”. It already does for the competition – at least if you believe Amazon’s euphoric statements.
“Customers are increasingly switching to streaming ad-supported premium content,” said Freevee director Ashraf Alkarmi recently. Amazon itself states in a press release that IMDb TV has had a successful start in Great Britain and the USA. In the United States alone, monthly active users have tripled in two years.
Netflix would not make films, series and shows available completely free of charge with an advertising subscription, but cheaper. Just as it is planned for Disney Plus, among other things. Expert Kleiner, who published a book about the business models of the individual services with “Streamland”, considers the advertising venture to be dangerous.
“Ad-supported models mean the death of streaming”
“Advertising subscription models mean the death of streaming,” he says. “Streaming thrives on users being able to enjoy their favorite series, movies and shows without interruption.” Kleiner believes that a widespread transition to ad-supported subscriptions would lead to the disappearance of streaming providers.
“Nobody wants to watch commercials every few minutes like they do on commercial television,” he says. The expert cites MTV as an example, where advertising has “completely eliminated” the idea of listening to the best music 24 hours a day. MTV eventually faded into oblivion, he says. Kleiner therefore paints a bleak picture for Netflix.
“The provider will have to switch to advertising-supported models if the numbers continue to collapse.” That could further fuel subscriber churn. A study by the AdTech company Trade Desk showed in 2021: 46 percent of Germans would use a free service and accept advertising for it. 25 percent of those surveyed would be willing to accept advertising for a lower subscription price.
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The numbers seem high but are down compared to 2020. Trade Desk interprets this as an indication to streaming platforms not to bother their own users too much with advertising.
In the end, one thing is clear: Amazon is putting pressure on its streaming competitors by constantly expanding its Freevee service. Netflix and Disney Plus are even considering offering advertising-supported subscription models. So is this the future of streaming? Ad-supported, if not completely ad-financed?
Anyone who observes the current developments comes to a clear conclusion: Yes, it is quite possible that the future of streaming will look like this. How sobering it would be is another question.