Amazon Is Going to Battle With YouTube

Five years ago Amazon decided it wanted to take on Netflix with an unlimited video streaming service chocked full of Hollywood movies and television shows. Now, the retail giant has its sights set on YouTube, the biggest video site on the Internet.

On Monday, Amazon announced Amazon Video Direct, a new self-service program that will let video creators post videos on the company’s streaming platform and either sell them, rent them, make them available to Amazon Prime members or offer them for free with advertising.

It’s the ad-supported videos that pose the biggest threat to YouTube. The Google-owned video site has come to dominate the world of online video by amassing a huge repository of videos and convincing marketers to sell ads against them. YouTube went largely unchallenged in this space for years, until Facebook’s aggressive push into video in 2014. Now Amazon will be another competitor with the deep pockets and technical infrastructure to be a potential threat.

Still, Amazon will face many challenges in order to take on the current video giants. Unlike YouTube and Facebook, Amazon Video is not an especially social platform. YouTube creators thrive by building vibrant online communities around their content, and Facebook uses the speed and ease of sharing across the platform to propel clips to virality. Amazon lacks either advantage, and as a site that traditionally requires money to use, likely skews toward an older audience who may not be as obsessed with online video stars as the typical YouTube user. It’s hard to imagine a star like video gamer PewDiePie emerging on Amazon Video Direct.

Scale is also an issue. Both YouTube and Facebook have more than a billion users globally, and their websites are more heavily-trafficked than Amazon’s. The retailer’s most voracious video consumers are likely Prime members, who number in the “tens of millions,” according to the company.

The retailer may be aiming to create a more premium experience that sits between homemade YouTube videos and movies on Netflix. Initial partners for Amazon Video Direct include Conde Nast, The Guardian and the multi-channel network Machinima. But even this style of video has quickly grown competitive. YouTube has bundled together content from some of its most prominent creators in a new subscription package called YouTube Red, while Facebook is convincing large news organizations to stream content via Facebook Live. Amazon will have to open its wallet wide to compete with such efforts. Early signs are that it’s willing to do so. In addition to offering ad revenue and royalties, the company will pay $1 million per month to the creators of the 100 most popular videos in Amazon Video Direct.