Amazon doubles down on original content – but is it enough?
Staff Reporter | On 24, Jun 2015Reading time: 3 mins
Amazon is doubling down on its original content spending.
The online retailer has become increasingly ambitious in the race to create brand new content. Earlier this year, the company announced that it would start making original movies> to go with its growing library of original TV shows. They, meanwhile, have drawn an increasingly impressive array of talent, from Woody Allen signing up to make his first ever series to the Ridley Scott-produced adaptation of Philip K Dick’s The Man in the High Castle.
Speaking to CNBC, Jay Marine, Vice President of Amazon Instant Video in Europe, confirmed that the e-commerce giant is only getting started.
“We’re going to continue to double down in that area, invest more to bring our customers worldwide, more originals, more great TV series that they have never been able to see before,” he said.
The comments arrive after Transparent won two Golden Globes, including the first Best TV Series award to go to an online-only show. Transparent’s focus on a unique story, shining a spotlight on a topic that is often overlooked in the media, captured audience attention. The site also recently confirmed that its deal with film-maker Terry Gilliam will see the director’s long-awaited The Man Who Killed Don Quixote finally made – the kind of movie that certainly would not exist without Amazon’s backing. But Amazon is not short of competition: Netflix is producing original shows and films every few weeks, while other sites are also stepping up their own commissions.
“The reality is there’s lots of places to get videos, it’s a very competitive market, we need to provide something different,” admitted Marine.
Amazon is also finding itself in a battle of budgets: with more projects on the cards, especially more ambitious ones, costs of production will only climb, while it will also have to compete with Netflix’s ever-expanding coffers. Only this month, its VOD rival launched Sense8, a sci-fi epic from The Matrix creators The Wachowskis.
Amazon spent $1.3 billion on Prime Instant Video in 2014, according to CEO Jeff Bezos. Doubling down would take that to $2.6 million, an impressive figure by anyone’s standards. But the online retailer still has some catching up to do: Netflix, according to one report from RBC Capital Markets, says that Netflix has $3 billion lined up for content this year, a number that will grow to $3.4 billion in 2016 and $3.9 million in 2017.
Amazon also struggles in terms of audience size: Netflix now has over 60 million users around the world, while research from IHS pegs Amazon’s user base at around 13 million, a divide that gives Netflix’s shows a bigger crowd to play to. More eyeballs means more word of mouth, which could hold the key to success in a social media age.
But Amazon may not be so bothered: as a retailer first and foremost, it has always presented its Prime media packages as part of a bundle deal that includes other perks: while Prime Instant Video costs £5.99 a month, a full Prime membership for £79 a year also offers unlimited next-day UK delivery. Indeed, the site has often reportedly struggled to get its Prime members to use its video streaming service. With a pay-per-view marketplace for rentals and purchases, not to mention its many other departments, though, Amazon will be seeing far greater financial returns from its members then Netflix; while the streaming giant has hiked its subscription fees to £7.49 a month, Amazon has left its price at £5.99 a month and can expect any interaction with its video content to encourage more activity elsewhere in its digital shop. The site may not be spending as much as Netflix on content now, but it’s not inconceivable that Amazon’s budget could reach much higher.
“People see the value. You get free one-day shipping and you get this video service and people will be paying that amount in a year anyway. People are smart,” added Marine.