Amazon Prime service may come to India this year

Amazon India may start offering music, movie and video streaming services later this year besides debuting its Prime subscription service as it looks to expand offerings in the country, key to its global expansion strategy.

The Jeff Bezos-led company is currently evaluating the feasibility of such services while building up a content library, which would be a critical element of Amazon Prime.

The Indian unit of the Seattle-based e-commerce company has tasked Nitesh Kripalani, former executive vice president at Multi Screen Media — which runs Sony Entertainment Channels — to get access to ‘digital content,’ according to a person familiar with the development.

“We are working towards it… difficult to say by when as Nitesh has just been brought in…but he will soon start talks with content providers,” said a second executive aware of the discussions.”The biggest limitation is the slow internet speeds. So, we are looking at how we can bridge this. Hopefully, we should have some of these offerings available sometime in the second half of the year.”

Amazon India’s push into the entertainment space marks an important step in the fiercely competitive e-commerce space where participants are looking to position themselves as a central gateway for customers — from everyday purchases such as grocery and diapers to music, books and movies.

The company is yet to appoint an executive who will roll out Prime in India, but it has started strengthening its logistics and shipping team and is expected to more than double this to 14,000 people by July from the current 6,000.

Bengaluru-based Flipkart last year launched Flipkart First, an annual subscription service, and some industry watchers believe it will not be a surprise if Amazon India launches Prime in 2015.

In the US, customers get free two-day shipping and get access to more than 15,000 movies and TV shows. Kripalani, who was appointed head of digital content at Amazon India last month, is expected to start negotiations with some of the country’s largest music and movie companies, including Mumbai-based Yash Raj Films and Eros International Media as these production houses hold the rights to thousands of titles.

Although details remain sketchy, multiple executives said Amazon India is looking to adopt the ‘streaming’ option rather than letting subscribers ‘download’ music and movies. This is unlike the model adopted by Flipkart, which allowed users to download music when it launched digital music store Flyte in February 2012. That shut a year-and-ahalf later after the service failed to find takers.

An Amazon India spokeswoman said it doesn’t comment on future plans.

Nonetheless, some experts urged caution as the country’s e-commerce market remains the smallest among emerging markets and what is being envisaged involves a high level of capital investment.

“Only a few million of India’s one billion-plus people purchase online and the COD (cash on delivery) issue has made it extremely expensive to execute well,” said Sucharita MulpuruKodali, retail analyst, who follows e-commerce for Forrester Research.

“India is the smallest e-commerce market of the BRIC (Brazil, Russia, India, China) countries and frankly I’m not sure why Amazon is investing heavily in it… when the company has a number of other issues to contend with,” she said. “I don’t see Indian e-commerce being as significant as Chinese e-commerce anytime soon, and the bet they are making suggests that they think it could be the next China. I’m not sure that is a realistic expectation.”

To be sure, Amazon has been unable to gain a foothold in the Chinese market, which is dominated by homegrown companies, hence the importance of the Indian market for the US e-commerce giant.