After several years of investing in high-budget movie and show content on its Amazon Prime platform, Amazon says the investment is beginning to pay off.
Key Details
- Since 2020, Amazon has steadily increased its budget for original video and music content from $11 billion to $16.6 billion last year.
- In a fourth-quarter earnings call, CFO Brian Olsavsky told investors that the high-budget content drew more subscribers to Amazon’s Prime services.
- Amazon’s total sales last year were around $289 billion, an enormous number compared to the amount spent on content last year.
Why it’s news
With dozens of available streaming services to choose from, Amazon Prime’s video content has to differentiate itself from many competitors.
Though relatively small compared to Amazon’s overall earnings, Amazon’s billions of dollars in investments needed to pay off. The online retailer gambled the steaming service’s success on significant investment in The Rings Of Power. Amazon’s five-year investment in its streaming service could have failed if the show had not been a success.
However, the show’s premiere marked the largest opening in the streaming service’s history.
What’s not being said
While Amazon says its media investment is paying off, reports of Prime membership declining could tell a different story. Last year, Amazon had 168 million Prime subscribers in the U.S. compared to 170 million in 2021, Insider reports.
According to market researchers Consumer Intelligence Research Partners, this slowdown is the first time Amazon’s Prime service hasn’t experienced growth.
“Prime membership has essentially stopped growing in the U.S., after many years of extremely fast growth, and then modest growth in the last two or three years,” CIRP said.
An Amazon spokesperson told Insider, “Prime membership continues to grow as the value members receive continues to increase.”
