Amazon Video Channels to Generate Roughly $1.7B This Year, Analysts Say

Jeff Bezos - Getty - H 2018
Matt Winkelmeyer/Getty Images

Prime Video Channels, which allows Amazon to sell subscriptions to over-the-top services from third parties, grew from an estimated $700 million in revenue in 2017.

Amazon's video business is getting bigger.

The e-commerce giant's Prime Video Channels offering, which allows customers to subscribe to third-party streaming services like Starz and CBS All Access, will generate an estimated $1.7 billion in revenue this year, according to a report from BMO Capital Markets. That represents growth of $1 billion compared with 2017, when the business brought in an estimated $700 million in revenue.

Analysts Daniel Salmon and William Lowden write that Prime Video Channels "is helping revenue mix shift more to subscription, which we believe investors value more highly."

The three-year-old service — currently available in the U.S., U.K., Germany and Japan — will pay out an estimated $1.2 billion this year, per the report. By 2020, that number is expected to grow to $2.5 billion as Amazon's Channels revenue grows to $3.6 billion.

"We believe the rollout of Channels is positive for entertainment companies for several reasons," the analysts write, pointing out that Amazon provides massive reach for video providers, promotes incremental signups and subscribers generate higher revenue than traditional MVPDs.

The Channels service currently offers subscriptions to around 156 services in the U.S. Channels allows people to subscribe and cancel at will without a penalty fee, making it easy for people to sample services.

Channels is part of Amazon's larger Prime Video offering, which also offers licensed titles and originals like The Marvelous Mrs. Maisel.