The launch of Amazon Channels in May may not have generated big headlines, but it could turn out to be a defining moment in the history of television in the UK.

A big, trusted online consumer brand is now saying to consumers: “We can sell you anything from toilet rolls to TV channels and you can pick ’n’ mix whatever you want.”

Some broadcasters and digital giants have been nibbling at similar ideas for a few years, but Amazon’s move is telling – buying your TV channels can now take place in the same one-stop shop as purchasing your groceries.

The move throws down the gauntlet to the big pay-TV companies such as Sky and Virgin: there is a huge, new competitor in town, one eschewing the traditional pay-TV strategy of bundling channels into tiered packages.

Customers who subscribe to Amazon’s Prime service at £79 a year (or £7.99 a month) will be able to pay extra monthly subscriptions for live and on-demand video services.

On offer in the à la carte TV menu (see box, opposite) are Discovery, Eurosport, ITV Hub and dozens of more niche services such as Daily Burn, which delivers live and on-demand keep-fit workouts.

For customers, Amazon Channels is the ultimate in pay-TV choice: you can choose only one channel if that’s all you need rather than, for example, a bundle from Sky or the “skinny bundle” of Now TV, or a monthly subscription to Netflix.

"For good or bad, customers are becoming very used to an ad-free experience."

“Amazon is smelling the opportunity to retail TV content and make money out of it,” says one industry observer. “It is commissioning content such as The Grand Tour and American Gods to act as billboards to get people into its shop to see all its sweeties.

“Now it is offering channels on a pay-by-channel basis. It is an evolving threat to the pay-TV platform channel packaging that consumers have been forced to buy through for the past 25 years.”

For the big players, such as Discovery and ITV, Amazon Channels offers another distribution platform beyond the traditional pay-TV platforms of Virgin Media and Sky. And one that comes minus commercial breaks.

“Ad-free is very prevalent on our service, as it is on a number of other SVoD services. For good or bad, customers are becoming very used to an ad-free experience.

“So I think it’s right that all sorts of broadcasters explore the various alternatives in the pay-TV world, and they are doing so,” says Alex Green, MD of Amazon Video. “Given the explosion in choice, we think that we are one easy point of aggregation for consumers and for the content industry. We think we can play a helpful role to make finding and paying for content easier.”

Because the deals are revenue shares between Amazon and the services, each benefits from a growth in subscriptions.

One potential drawback, according to Enders Analysis, is putting your channel or content on a platform that you do not control and giving Amazon access to the payment and usage data – which could be a problem if you want to grow a direct-to-consumer offer.

At a time when many content owners, including Disney, NBCU and Discovery, have their own apps, joining another aggregator, especially one as big and as powerful as Amazon, may cause some to pause for thought.

ITV’s ad-free ITV Hub+ service has already been available via Apple’s iTunes and on some smart TVs and, more recently, direct on the web.

For ITV, launching on Amazon Channels is simply another route to consumers; its service provides catch-up programmes to stream or download for £3.99 a month.

ITV plans to begin a marketing push of ITV Hub+ in the next few months as part of its wider pay-TV ambitions. These include pay-per-view boxing on the new ITV Box Office channel. This was due to show its second live bout on 15 July, with Chris Eubanks Jnr taking on Arthur Abraham at Wembley.

So why hasn’t Channel 4 joined Amazon Channels? The broadcaster has not yet created an ad-free version of its catch-up service, All 4, so it would have to acquire pay-T V rights to shows. The “numbers didn’t add up”, says a Channel 4 spokesman.

For smaller content owners, such as Horse and Country TV and preschool kids’ content app Hopster, Amazon Channels provides opportunities to attract subscribers without investing
in expensive infrastructure.

There is also a marketing opportunity: Amazon offers personalised recommendations across all of the content on its platform, from the “free” Prime video content to pay-per-view and Channels content.

For example, someone who watches an Amazon original production on Prime will be offered similar types of content, including content from third-party suppliers on Amazon Channels.

“The metadata is totally integrated and that allows us to drive recommendations across the board, not just inside of Channels,” says Green. “We share data copiously with our partners, both financial and subscription data and also usage data as well.

“This is all about working in partnership to understand what content works, how deep the library should be, what the refresh rate should be.

“We look at all these factors to improve their service and that has to be data-driven.”

Amazon Channels is also available on a growing number of smart TV and connected devices.

“Amazon is important because it brings together so many pieces of the picture in one place,” says Nick Walters, founder and CEO of Hopster.

“Amazon has existing payment solutions to plug into and a huge search platform, so organic discovery should be strong,” he adds. “And it has its own portfolio of consumer devices, as well. Not many others can put all those pieces together.”

Research from the US, where Amazon Channels was launched at the end of 2015, has shown that the smaller, more niche channels do better on the service. They have a higher uptake than some of the bigger pay-TV brands such as Showtime, Starz and HBO, says Ampere Analysis’s Richard Broughton.

“At the moment, Amazon Channels doesn’t really impact on the pay-TV players but, longer term, it will if it effectively replicates the pay-TV offer,” he explains.

Basic TV channels are being squeezed by the traditional pay-TV platforms over the price they are willing to pay to carry these channels. Witness the latest dispute between Discovery and Sky over the carriage fees that Sky pays Discovery for its channels.

It is, therefore, no wonder that pay channels will be looking for other ways to reach potential subscribers.

However, Broughton says that Sky is “reasonably well protected” in the near term because it has exclusive deals with HBO, Starz and Showtime for the next three to five years, as well as premium sport rights.

“It’s been shown that it is very difficult to compete with Sky unless you buy up the rights for high-profile content,” he says.

But more content is coming from Amazon. “It’s very much day one for Amazon Channels in the UK,” says Green. “For us, it was important to have a good spread across genres. In terms of the more high-profile channels, I am sure there are more to come.”

According to Amazon, ­customers say that after free shipping, having access to unlimited streaming of “tens of thousands” of movies and TV episodes is the best part of paying for an Amazon Prime subscription.

Analysts at Morgan Stanley say that Amazon Prime subscribers spend 4.6 times more on Amazon than non-Prime customers. Therefore, increasing Prime subscriptions increases overall Amazon revenues. “We want to build engagement with a wide range of video content, and the more time people spend on Amazon is a good thing,” says Green.

Amazon got serious about commissioning original programming in 2014 when it took the BBC’s cancelled Ripper Street and made three new series. The Grand Tour, with Jeremy Clarkson and co, followed last year. Analysts at JP Morgan say that Amazon will spend a staggering $4.5bn on video content this year.

The oft-quoted quip from Amazon CEO Jeff Bezos is: “When we win a Golden Globe, it helps us sell more shoes.”

Amazon’s ambitions are big across the board. The recent announcement that it will pay $13.7bn in cash to purchase premium US grocer Whole Foods extends the giant company into bricks and mortar retailing as well as giving it access to vast troves of customer data.

Amazon’s Green prickles a bit when asked if video is really a loss-leader for selling more shoes and groceries: “We are investing enormous amounts in video. So it’s really not a question of doing something in order to serve something else.”

With Eurosport’s arrival on Amazon Channels in the UK, this is the first time that Amazon has live-streamed premium sport, starting with the French Open tennis tournament.

In the US, Amazon has paid $50m to screen 10 live NFL football matches this autumn. Some analysts believe this signals that Amazon is set to become a bigger player in live-sports rights auctions.

Would Amazon bid against Sky for Premier League football? Amazon’s Green declines to comment.

So is Amazon’s move into offering à la carte TV the “thin edge of the wedge”? Will it, one day, start to bundle channels into packages, as Sky and Virgin do?

Perhaps, but, for the moment, Amazon Channels is a way for content owners to take advantage of Amazon’s reach and its ability to target all manner of screens with a simple and clear, channel-by-channel offer.

As Amazon Channels gets bigger, content owners will undoubtedly question how prominent their channels and brands are in the Amazon ecosystem and how the spoils are shared between them.

Which is not a million miles away from the situation today with the big pay-TV platforms such as Sky.

One thing is clear: if Amazon Channels gets this right, then the UK television industry can welcome a big new player to the table. 

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Pick ’n’ mix from Amazon Channels

= Acacia TV Fitness service for £5.99/month

= Alchemiya Films about Muslim culture and life for £3.99/month

= Arrow Video On-demand cult classics and horror from Arrow Films for £4.99/month

= BFI Player+ On-Demand classic British and critically acclaimed movies for £4.99/month

= BeFit UK Get fit with unlimited streaming of hundreds of workouts for £5.99/month

= Cheddar Live and on-demand news about innovative technologies for £2.79/month

= Comic Con HQ Fan-favourite films, original programming, exclusive access for £4.99/month

= Curiosity Stream Exclusive HD documentaries for £5.49/month

= Daily Burn On-Demand and live workouts fitness for £9.99/month

= Discovery £4.99/month

= Eurosport Player £6.99/month

= Fandor Indie, foreign and classic films for £3.49/month

= Filmbox Hollywood movies and TV series for £3.99/month

= Full Moon Features Full Moon classics and new releases on-demand for £3.99/month

= Gaia Yoga, nutrition, meditation for £7.99/month

= Horse & Country Play Equestrianism and British country lifestyle for £3.99/month

= ITV Hub+ £3.99/month

= Hayu Reality TV for £3.99/month

= Heera Bollywood, Bengali, Marathi, Tamil and Telegu movies, £3.99/month

= Hopster Kids’ TV for £3.99/month

= Ketchup TV Kids’ TV for £2.29/month

= Love Nature Nature docs for £3.99/month

= MGM Hollywood movies for £4.49/month

= Motorvision TV On-demand TV for petrolheads for £2.99/month

= MUBI Movies for £5.99/month

= Nautical Channel Sailing for £3.99/month

= Nordic Noir & Beyond Scandi drama for £4.99/month

= Panna Cookery for £1.49/month

= Pinoy Box Office Filipino movies for £1.99/month

= Planet Knowledge HD docs, nature, history and culture for £2.29/month

= Pongalo Next Latin American movies and series for £2.99/month

= Qello Concerts Rock shows for £5.99/month

= Realeyz Indie films for £4.99/month

= Rooster Teeth Sci-fi, gaming and comedy for £3.99/month

= Shudder Thrillers, suspense, and horror for £4.99/month

= Studio Universal Classics Movies for £3.99/month

= Sweatflix Fitness for £9.49/month

= Tastemade Plus Food and travel for £1.99/month

= The Great Courses Signature Collection Education for £5.49/month

= UP Faith & Family Family entertainment for £3.49/month

= Viewster Anime Movies for £2.99/month

= YogaAnytime Channel Yoga for £6.99/month

Amazon Channels UK as of June 2017.