Digital Transformation

Amazon talks up content division as viewing hours on Prime Instant Video double

By Jennifer Faull | Deputy Editor

January 29, 2016 | 4 min read

Amazon’s relentless focus on Prime Instant Video over the past year has seen the amount of content being viewed on the streaming service double, boding well for boss Jeff Bezos’ desire to be amongst the top movie studios when it comes to winning big awards for its original TV series.

The e-commerce giant was particularly pleased with uptick it saw outside of the US. Internationally, it had twice as many Prime members streaming year-over-year.

“So [we’re] very encouraged by the pickup and the response of customers,” said finance boss Brian Olsavsky on a call with analysts yesterday (28 January) to discuss its Q4 performance.

It perhaps unsurprising given that it doubled down on the investment going through Amazon Studios, its original content division, and produced more original series pilots by the first quarter of 2015 that it had in the whole of 2014.

It’s received critical acclaim for the likes TV shows Transparent and Mozart in the Jungle, both winning a number of Golden Globes. Turning its attention to film, next month will see the launch of Chi-Raq, the first original movie to come out of Amazon Studios which has already made many critics' best film list in 2015.

Elsewhere, its continuing to get under the skin of major Hollywood studios. Execs recently flew to Sundance Film Festival and spent big to secure the rights to several independent films.

Amazon’s splurge on content may go some way to explaining why its latest quarterly profit missed estimates despite delivering the largest rise in its 20-year history with a 55 per cent year-on-year rise to $482m. Ultimately, it hefty content spend underpins the arguably more important part of its business – selling stuff.

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To access its library of films and TV shows, users need to be Prime members – the key asset in an ambitious plan to create an ecosystem where users will spend more time and money. It offers free one-day delivery, access to unlimited music, TV shows and movies.

Amazon revealed a 51 per cent increase in its global Prime membership, but offered little colour on adoption and conversion rates: “When Prime Video is used by our Prime members, it drives adoption and retention, higher free trial conversion rates, and higher renewal rates for subscribers,” it said.

Coinciding with the focus on content has been a noticeable drive to get more people using its app. It ran a number of campaigns toward the end of 2015 to talk up both the ease of use and how quickly it can get items delivered to customers’ doors.

“Mobile […] continues to be a tailwind for the business. We're working very hard to make sure that it's very easy for customers to buy the things they want to buy and access, a lot of the features they’ve grown accustomed to on the website. And so we're very focused on the convenience factor,” explained Olsavsky.

Sales for the full year were up 20 per cent to $107bn - the first time the total has exceeded $100bn – with revenue growth of 22 percent compared with the same period last year and a leap in profit of 125 percent from the same period.

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