By Amanda Weston
Amazon's reported free video service may be designed to entice more people to sign up for Prime subscriptions, said PCWorld's Michael Simon.
"I think if they come out with an ad-supported version, which will probably show a smattering of popular shows to people who aren't Prime members yet, I think it could be super successful for both selling Fire TV devices, which would presumably be the way to get it like Roku, and also upgrading people to that full Prime membership, which I think is the ultimate goal here," Simon said Thursday in an interview on Cheddar.
The Information reported Tuesday Amazon is planning to launch a service called Free Dive for its 48 million Fire TV customers. Free Dive would be separate from the retail giant's Prime Video service and could be a direct competitor to the popular Roku Channel. Shares of Roku dropped 3 percent Wednesday after the news.
Simon said Amazon is likely trying to sell as many Fire TVs as it can to ultimately lure fans to its Prime program, which Amazon CEO Jeff Bezos revealed in a letter to shareholders in April has over 100 million subscribers. Even after the company raised the annual cost of membership from $99 to $119 in May, Simon called the service "lifetime commitment."
Prime members get access to Amazon's original content, but The Information suggested the company wants to license older TV shows that have already aired on other networks for Free Dive and make a play for the traditional TV ad market.
For Amazon to take over the industry from streaming giants like Netflix and Hulu, Simon said it might take a while.
"Netflix has a tremendous catalog and Amazon is, you know, they're slowly but surely getting there," Simon said. "If I had to peg it, I'd say it'll probably still take another three to five years before they're a realistic competitor to Netflix."
For full interview click here.