Amazon Spent Nearly $19 Billion on Content Last Year
By Movieguide® Contributor
While most of the entertainment industry has decreased spending over the past year due to strikes and profitability questions, Amazon’s spending on content rose 14% in 2023 to nearly $19 billion.
“We have increased conviction that Prime Video can be a large and profitable business on its own, and we’ll continue to invest in compelling exclusive content for Prime members like THURSDAY NIGHT FOOTBALL, LORD OF THE RINGS, REACHER, MR. & MRS. SMITH, CITADEL and more,” said Amazon CEO Andy Jassy.
While the enormous content budget includes the costs of licensing music as well as shows and movies, Amazon’s spending looms over Netflix’s $12.6 billion spent over the year.
Amazon plans to continue outspending its competitors on content by introducing ads on the site. The addition is expected to add two to three billion dollars in additional cash flow, most of which will be reinvested into Prime Video.
The platform has already announced some of its plans for the upcoming year, including a faith-based show in collaboration with Jon Erwin and the production of a show that follows the lives of professional Esports athletes. The company hopes these shows can succeed like its other original content, such as THURSDAY NIGHT FOOTBALL, which had a 24% increase in viewership from the previous year.
Despite dolling out large amounts on content, not everything is smooth sailing for the tech conglomerate. This year, the company has already cut hundreds of workers in the entertainment sphere, particularly at its livestreaming platform, Twitch.
“This is a difficult decision to make and one that my leadership team and I do not take lightly,” Amazon’s entertainment chief, Mike Hopkins, wrote in January in an email to employees. “It is hard to say goodbye to talented Amazonians who’ve made meaning contributions.”
“I know many of you are wondering why this is happening,” added Twitch CEO Dan Clancy in a blog post addressing. “Over the last year, we’ve been working to build a more sustainable business so that Twitch will be here for the long run and throughout the year we have cut costs and made many decisions to be more efficient. Unfortunately, despite these efforts, it has become clear that our organization is still meaningfully larger than it needs to be given the size of our business.”
“As with many other companies in the tech space, we are now sizing our organization based upon the current scale of our business and conservative predictions of how we expect to grow in the future,” Clancy continued.
Movieguide® previously reported:
As January comes to a close, Amazon Prime Video becomes the final major streaming service to incorporate ads onto its platform, as it expects to add up to $3 billion a year through commercials.
Starting on January 29th, Prime Video users will now get ads while watching TV shows and movies unless they pay an additional $2.99 per month on top of their Prime subscription. Though the platform promises to feature “meaningfully fewer ads than linear TV and other streaming TV providers,” this new addition will lead to incredible profits for the company.
Morgan Stanley predicts the company will generate $3.3 billion in Prime Video ad revenue during 2024, rising to $5.2 billion in 2025 and a staggering $7.1 billion in 2026. Analysts from MoffettNathanson are less optimistic, forecasting $1.3 billion for 2024 and $2.3 billion for the following year. Either way, Amazon will take a lion’s share of profit through this simple change.
“This Monday, we are going to find out what happens to an advertising market when a brand-new entrant with excess capacity, unrivaled first-party data advantages and massive unduplicated reach decides to put a ‘for sale’ sign in its windows,” said MoffettNathanson analyst Michael Morton.
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