Amazon to continue investing in original content as media streaming doubles
Staff Reporter | On 07, Feb 2017
Amazon will continue to increase its investment in original content as media streaming through Prime Video grows.
The online giant announced its financial results for the fourth quarter of 2016 this month, and while net sales were lower than expected (despite growth of 22 per cent year-on-year), net income grew to $749 million, marking the firm’s seventh quarter of profit in a row. Amazon’s main emphasis, though, was on its expanding Prime membership, with CEO Jeff Bezos said that “tens of millions” new members signed up last year – about as specific as its figures get.
While Prime membership includes free next-day delivery on Amazon purchases, one its biggest benefits is its inclusive streaming of Amazon’s Prime Video TV shows and films – and Amazon has been doubling down on that in the last year to increase it as a value proposition. Indeed, last year Amazon stepped up its streaming presence by launching its VOD service, also available as a standalone subscription, in 200 countries – rivalling Netflix’s worldwide reach for the first time. (Full Prime membership, meanwhile, is now available in Belgium, Canada, France, India, Italy and Spain, reports Variety, joining the UK, USA, Germany, Austria and Japan.)
CFO Brian Olsavsky, on a call with analysts, said that the global reach was vital in getting a stronger return on their investment in original series and films. Indeed, Amazon’s spending was forecast to double in the second half of 2016 compared to the previous year.
“Its very much a fixed-expense base,” he commented. “And the ability to amortize that over a large population is what we’re looking for.”
Its spending has certainly boosted its streaming credentials, with Manchester by the Sea, snapped up by Amazon Studios at Sundance last year, now a frontrunner in the 2017 Oscars race. Amazon Studios was also nominated for 11 Golden Globes this year, winning two.
Customer engagement is on the up too, notes Digital TV Europe, with consumption of Amazon media (including music and books as well as video) more than doubling compared to 2015.
“One of the main things we look out on Prime Video is customer usage patterns and in 2016 we had a doubling of Prime hours for video, music and reading. So we’re happy with the engagement that customers have,” added Olsavsky.
“We’re very happy with the results in video,” he said, noting that investment stepped up in the second half of the year and would continue to do so in 2017.
“Digital content, digital video content and marketing stepped up quite a bit in the second half of the year,” he commented. “We continue to invest heavily in those two areas.”