Enterprise Software companies know that it is imperative to add features and functionality in order to justify price increases. It is time for streaming services to learn that lesson.
What can streaming services learn from the Enterprise Software industry? One important lesson is that Software companies that genuinely care about their customers add value in the form of incremental features and functionality in order to justify price increases. Few of the streaming services have learned this lesson.
Amazon (AMZN) is one of the exceptions. The company continues to add content to its Prime Video platform to help justify the annual price increases to its Prime service. For example, Amazon recently closed its acquisition of MGM Studios which brought the James Bond franchise into the Amazon Prime Video portfolio. In addition, Amazon recently won the exclusive rights to broadcast Thursday night NFL games through its Prime Video service. My guess is that as Amazon builds out its Healthcare business Prime members will receive exclusive benefits, a strategy that Amazon has utilized with its Whole Foods acquisition. We applaud the strategy of acquiring proven content IP (MGM/James Bond franchise) and exclusive rights to proven content IP (NFL) versus original content production which is a “hit and miss” game.
Content shakeup. Our assumption is that the Media and Entertainment industry (both traditional media as well as “new media”/video games), will further consolidate if the Biden Administration is voted out of office in 2024. Our view is that a new, more company-friendly FTC will be ushered in under a Republican Administration and at that time we will see the likes of Apple (AAPL) and Amazon (less so Google/YouTube), pursue acquisitions of companies such as Disney (DIS) and Warner Bros. Discovery (WBD) (especially the latter as John Malone is a deal guy history suggests that he will sell WBD once CEO David Zaslav has had an opportunity to right the ship, all else held equal. A potentially deep recession beginning in 2023 would scrap those plans).
Until such time it will be difficult for Amazon and others to execute mega acquisitions under FTC Chair Lina Khan.