Amazon India will invest $300 million in original Indian content for Prime

Pankaj Mishra July 18, 2016 3 min

Amazon Inc. has started talks with Bollywood producers and other independent production houses in India for building its local video streaming content play as part of the Amazon Prime launch later this year.

According to at least six people including some producers currently in talks with Amazon, the company is committing up to $300 million in funding movies and series ideas, part of the $3 billion fresh funding war chest CEO Jeff Bezos announced for India in June this year.

Earlier this year, Amazon quietly hired Aparna Purohit, a veteran film producer, as the head of creative development for Amazon Prime Video in India. Ekta Kapoor’s Balaji Telefilms and Yash Raj Productions are among top production houses currently in talks with Amazon, two people familiar with the negotiations said last week.

As this Economist story captured, “television is at last having its digital-revolution movement,” with the rise of Netflix and other video streaming services. In India too, the success of Star’s Hotstar app and the launch of Netflix earlier this year, has set the market on fire.

Now, Amazon wants its share of this market. And unlike other pure play video streaming services, Amazon is hoping to bundle this for its Prime subscribers, which allows it to price the video service much more competitively. Amazon does not disclose the number of Prime subscribers, however, one survey estimated that the company could have 60- 80 mn subscribers globally.

“For Amazon, the Prime subscribers are the most profitable lot, and video is among several other services they get,” said a person involved in the launch requesting anonymity. Amazon Prime membership includes free same-day delivery apart from other incentives. In April this year, Amazon started offering Prime for a monthly subscription fee, taking on rival Netflix. Until then, Prime was sold at $99 for a year.

“By sometime mid next year, you should see some of the local video content go live on Amazon Prime in India,” the person added. Amazon India and Balaji Telefilms did not respond to an e-mail sent by FactorDaily.

Amazon Prime Price
Image: Cost of Amazon Prime in the US.

Growth in India’s earning population from 40% of the total population to 54% and increased acceptability of mobile wallets is attracting even the older incumbents to join the video streaming frenzy, as this Ernst & Young report noted in January this year.

“TV will bounce up very strongly if it harnesses its digital avatar – i.e., the twin streams of linear and non-linear content, running in tango, propelled by good tech in digital distribution to create extra engagement, shall win this battle,” said Raghav Bahl, a veteran media entrepreneur who is now building Quint. “Newcomers will really find it tough once (and if) the legacy leaders get their act together – having said this, there will always be breakthrough winners among some newcomers.”

Despite being considered among the most lucrative markets for internet products globally, India has some unique challenges to solve. Poor broadband infrastructure is among the roadblocks in getting more users to pay for streaming services. And it’s been a slow burn for new entrants such as Netflix as Mint reported earlier this month.