Amazon Prime’s Ultra-lean Assault on Hollywood

With the news of Amazon’s bold foray into the competitive world of original content, it’s hard not to see their decision as yet another disruptive application of the lean startup methodology.

First, a quick history lesson:

Much like the wider world of software in the 1990s, media in the early 2000s was held hostage to the distribution channels. One of the hardest things about producing a hit TV show or movie was physically putting it in front of somebody’s eyeballs, so power was concentrated in the few companies that could do that: Blockbuster, Network TV, and Movie Theaters.

Fast forward to today, and streaming video has made content distribution, much like software distribution, more or less a commodity. Broadly speaking, I no longer have to think about what content I can watch where. Most media subscriptions come with multi-channel delivery across TV, desktop, mobile, and tablet devices. Because there are fewer barriers to entry, there are many more viable options.

Content may have always been king, but in this competitive environment it’s even more regal.

Last year, Netflix made the right decision to diversify out of content delivery and into content creation. But in their first year as a TV studio, they likely realized what studios have been trying to tell them for years during contract negotiations:

It’s hard as hell to make a hit TV show.

With this in mind, Amazon’s own attempt is careful not to compete with the big guys head on at their own game. Instead, they’re using guerrilla tactics: six comedy pilots, with one winner decided by viewer response.

It’s the lean solution to an overwhelmingly waterfall Hollywood mentality, and here’s why:

• It’s cheap: With $5 billion in cash on their balance sheet, Amazon could afford to throw money at the problem like the traditional studios do and Netflix did in their first attempt. But their decision to go with only comedies — and for the most part, unknown actors — indicates that they’re not willing to take a big upfront risk on the project given the swirling uncertainty and their own inexperience. They’d prefer to inexpensively shoot for a value play while they build out their own skills and business model.
• They have six chances to succeed: Lean methodology instructs startups to quickly iterate on their product until they find one that is commercially viable, or go bankrupt trying. By bringing six pilots in front of viewers, Amazon gives themselves six inexpensive lottery tickets, instead of the one expensive one that Netflix opted for. Reading the descriptions of their six pilots, I can’t tell you which one (if any) will be the hit, but I’m pretty sure at least one of them will be pretty good and have moderate success.
• The product is extremely targeted: Startups can’t afford to be everything to everyone, so the first few iterations of their product must be extremely targeted. Amazon’s six pilots are all comedies, aimed at the young professional demographic. It’s no coincidence that yuppies are also Amazon Prime’s core customer.

Will Amazon’s entry into original programming be successful?

As always, it depends entirely on how good their content ends up being. But if the software industry is any indication, their distinctly lean approach to content creation will translate to a better product.

In doing so, it could change the media industry forever.