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The Amazon ecosystem effect: Kindle, Echo and Fire TV lead to higher video subscriptions

The Amazon product ecosystem leads to higher Prime Video affinity and service ratings, according to new research.


Highlights

  • More than one in five US households have at least one Amazon device, including Kindle, Echo and Fire TV.

  • More than two-thirds of Fire TV owners were subscribed to Amazon Prime Video in the US in the first quarter of 2018 – a higher penetration than for any other connected streaming device.

  • Fire TV owners are more likely to select Prime Video as the “best video service for content on the go” and “flexibility of viewing.” More than 25 percent of Prime Video subscribers believe Amazon provides the largest content catalog.

  • On average, US households with a Fire TV and an Echo device are more likely to engage with the Amazon Alexa digital assistant. They are also twice as likely to turn to Prime Video first when looking for video content to watch.

The survey found Amazon’s Fire Stick helps to drive brand loyalty. In fact, Amazon Fire device owners were more likely than other Prime Video subscribers to select Prime Video as their top choice, across a series of quality statements. The survey also reported an 8-percentage-point uplift in Fire Stick owners choosing Prime Video as the best video service for “flexibility of viewing” and “access to content on the go.” They were also more likely to select Prime video as having the best quality content and largest content catalog.


These survey findings highlight the importance of a proprietary device and user interface that allows consumers to gain access to a wide range of content services, while enabling the device manufacturer to control the user experience. The value-added benefits of offering streaming devices and video services, in terms of perception and usage along with the ability to maintain their direct-to-consumer relationships and interfaces, has driven other operators and device manufacturers to follow Amazon’s lead.


While Apple changed the music landscape by tying its transactional music service to hardware more than a decade ago, it is now hard to lock consumers into one content ecosystem. Consumers expect flexibility and the ability to access their content across devices, so building a fluid ecosystem ensures higher brand loyalty and trust, resulting in increased usage of devices and services and the likelihood of future purchases. Brand loyalty is especially important in this category, because entry prices for streaming devices are relatively low, and all of them offer somewhat uniform content offerings, so consumers have a wide range of choices.


Fire TV was one of the top sellers in Amazon’s Prime Day in July 2018, and there are rumors of an upcoming user experience update, which is likely to result in improved consumer engagement with Prime Video. Amazon’s low-priced device strategy pays off, by increasing customer value across its various operations, and by ensuring Amazon is at the forefront of consumers’ minds when they make future purchases.


IHS Markit has also prepared an infographic with further information on this topic.


Connected Devices & Media Consumption Intelligence Service

IHS Markit brings together operator intelligence with consumer behavior analysis, to highlight the dynamics and addressable market of connected consumers and devices. This service comprises biannual consumer survey interplay and overlap between device ownership and media consumption with demographic breakdowns. The above data is based on a nationally representative sample of 2,401 internet users in April 2018.

By Fateha Begum, associate director, television media, IHS Markit

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