What Does Amazon Understand About Online Video That Others Don't?

In January of 2015, Amazon Studio's transformative series “Transparent” won the Golden Globe for best TV series, musical or comedy.

It's undeniable that “Transparent,” under the creative stewardship of producer Jill Soloway, broke new narrative ground for Hollywood-produced comedy series - depicting how a father lets his children know that he identifies as a woman. But "Transparent" is also notable because of where it comes from: It's the first online series to win a best series award at this annual awards show.

How did that happen?

How did the largest internet-based retailer in the United States - with a corporate reputation for button-down efficiency - become the producer of a highly-praised and edgy TV show?

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Was it a fluke?

Or is there some method behind the apparent madness?

As explained in a March 15th, 2015 article in The Seattle Times, Amazon is reluctant to disclose how many customers it has for its $99 per year Prime service ("two-day shipping on millions of items from Amazon.com at no extra charge"). Which means that we don't know exactly how many subscribers there are to Amazon's "Instant Video" service that is included in a Prime account.

But we do have Nielsen data and information from Amazon's video-streaming competitors that can help us to make some educated guesses. For example (per The Seattle Times), "Netflix said it had 39.1 million U.S. streaming subscribers at the end of 2014. According to Nielsen, Netflix’s share of U.S. streaming subscribers is 2.8 times as large as the number of Amazon’s video-streaming users. That suggests, then, that about 14.5 million Prime subscribers used Amazon’s subscription-video service last year." 

If correct, those numbers would make Amazon Prime the second-largest subscription video-streaming service in the U.S., with access to a relatively small sliver of all U.S. television households

And, as Adam Sternbergh wrote in a May 6th, 2015 post to Vulture.com: "To compete with companies with bigger staffs, more prestige, and a more established track record, Amazon has had to look for an unexploited competitive advantage — and [Amazon Studio's head Roy] Price thinks he’s found it in simply making the shows no one else is willing to make."

And, as he told The Hollywood Reporter in July of 2014, Roy Price's approach is distinctly different - because he recognizes how the audience's approach to viewing in an on-demand world is different:

"In an on-demand environment, people have to demand your show. Nobody turns on the TV and, what do you know, Alpha House is playing. Let's say you had a show where 80 percent of the people you show it to think it's pretty good. They might watch it, but none of those people think it's a great show nor is it their favorite show. But then you have another show where only 30 percent of people like it. For every single one of them, they're going to watch every single episode and they love it. Well, in an on-demand world, show No. 2 is more valuable. That really changes how you approach it, because what you need to do is get more specific. It's less about following generic, general rules for creating television and more about finding a specific voice and a specific artist that people are going to be a fan of."