Amazon's content spend at $5 bn a year, confirms report


MUMBAI: Amazon is bucking up by opening its treasure trove for content. A recent Reuters report says that leaked documents show the company spends $5 billion a year for original and licensed content, which is a big chunk of the company’s expenditure.

Amazon has tough competition because Apple recently said it would spend a whopping $4.2 billion a year on original content by 2022, much higher than its earlier estimate of $1 billion.

The Reuters report also stated that Amazon’s top TV shows drew more than 5 million people worldwide to its Prime shopping club in early 2017. Amazon has never released figures for its total audience. The report adds that Amazon has about 26 million people in the US who watch its Prime Video content. The video content includes films and TV shows it licenses from other companies.

Rival Netflix is way ahead in terms of US subscribers at 55 million. The company says that it is growing at a fast pace and the extra revenue it earns via subscribers will help it in invest more in original content. The company upped its spending for 2018 by nearly $1 billion. Hulu, which has subscribers mainly from the US, claims to have 17 million subscribers.

The first season of the popular drama The Man in the High Castle on Amazon Prime Video had 8 million US viewers as of early 2017, according to the documents. The show cost $72 million for production and marketing and attracted 1.15 million new subscribers worldwide based on Amazon’s accounting. The Grand Tour had more than 1.5 million first streams from Prime members worldwide, at a cost of $49 per subscriber in its first season.

It has often been said that Amazon’s strategy is to use video to convert viewers into shoppers. If it is wooing you with amazing content, such as the $200-250 million on Lord of the Rings, it is only to convince you to keep returning to it to make purchases. Amazon’s investment in Prime original shows has enabled these shows to bring nearly a quarter of the total viewership from 2014-2017.

Amazon’s Prime club includes two-day package delivery and other perks for an annual fee making shopping more attractive. But these internal documents don’t indicate how much the Prime subscribers shop on Amazon. In interviews, Amazon CEO Jeff Bezos has been vocal about how people who use the Prime Video service end up staying longer with the shopping club. These people even agree to become paying members after the free trial, willingly paying a higher rate than those who don’t watch Amazon videos.

Some of Amazon’s videos have even won awards and thus you have Bezos saying, “When we win a Golden Globe, it helps us sell more shoes.”

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