Over the year 2022, Amazon should spend 15 billion dollars to produce and buy programs, which puts it ahead of all the competition. Despite this, Prime Video is far from profitable, but that doesn’t really concern Amazon.
According to the estimates of Bloomberg Intelligence, Amazon would spend $ 15 billion on programming for the whole of 2022 (which includes original productions, purchases of programs and sports broadcasting rights) for its Prime Video platform. Alongside Netflix which would spend 13.6 billion dollars, Amazon is the only one above the symbolic bar of 10 billion. If we can think that Prime Video is a money pit, this would not be the opinion of Amazon, which intends to play well in the long term.
Amazon invests heavily in its original productions
Among these 15 billion dollars, there are five in the purchase of sports broadcasting rights (which includes Ligue 1 and Ligue 2 among others) and a dozen in original productions. Last year, Amazon announced the acquisition of MGM, which has a catalog of 4,000 movies and 17,000 TV shows, for $8.45 billion.
For example, the series The Lord of the Rings: The Rings of Powerwhich arrived on Prime Video in September, cost $250 million in rights and $465 million to make the first season. France Info recalls that the group has committed to producing five seasons, which means that the total cost of the series should well exceed one billion dollars.
Lower Amazon Prime churn
The free and faster delivery of products of all kinds is the first factor for subscribing to the Amazon Prime service, the streaming of films and series is in fact only in second place. Amazon is far from being in financial danger since the English-language media recalls that the company ” generated $470 billion in sales and $33 billion in net revenue last year“.
Prime Video therefore does not need to be profitable, at least in the immediate future. What matters most to Amazon is the churn rate of its customers and for once, it is almost non-existent. A danger that Netflix and Disney + face more, only offering streaming video.
Thanks to its offer, Amazon is playing for the long term with Prime Video
As mentioned Bloomberg, Amazon’s strategy is different from that of its competitors on SVoD. When other platforms use the programs they buy or produce to attract subscribers, Prime Video is just a loss leader.
For Lucas Shaw, journalist atBloombergAmazon “uses entertainment to lure you into its ecosystem and market other products“. To access Amazon Prime Video, you must subscribe to the Amazon Prime subscription. This offer is available at 69 euros per year and entitles you to free and faster deliveries on Amazon as well as music streaming services, PC video games, photo storage, etc.
Apple is Amazon’s real competitor
Netflix and Disney+ are often mentioned as Amazon’s main competitors on SVoD, but the real competitor is Apple. Lucas Shaw recalls that “Amazon and Apple approach entertainment as aggregators. Their original lineup is just part of a much bigger package you buy from them“.
Like Amazon, Apple sells other services alongside Apple TV+, bundled into the Apple One subscription. According to a report by Antenna, a data company, “customers who subscribe to its six-service plan (games, TV, music, cloud, news and fitness) are much less likely to cancel than people who pay for one service alone“.
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