Last week, Amazon carried out the largest round of layoffs in its entertainment business, as it corrects course from an aggressive increase in hiring and spending in recent years.
The layoffs affected Prime Video and the Amazon MGM Studios division, and many of the cuts are related to Amazon’s $8.5 billion acquisition of MGM in 2022, the second-largest deal in the tech giant’s history.
People in and around the company are wondering what’s next. For years, studio boss Jen Salke has poured billions of dollars into original content to feed Amazon’s Prime Video service, which is part of her Prime membership program. She hired Hollywood companies and splashed money on talent. The service has won prestigious awards.
However, the results have been uneven. The Lord of the Rings: The Rings of Power, for example, has been one of the most expensive television series ever made, with an estimated cost of $500 million for the first season. However, Hollywood Reporter has reported that only 37% of American viewers finished the series. On the other hand, it is believed that Citadelanother fairly expensive series, has exceeded expectations.
As part of evaluating its entertainment business, Amazon has also been evolving its free ad-supported video service, Freevee. Freevee staff have been reassigned or have been informed that they will be moving to Prime Video. Over time, Freevee is expected to stop producing original content, company insiders told Business Insider at the beginning of January.
To two of the people fired from Amazon last week, the cuts seemed cold and impersonal. According to what they say, they received emails at 5:30 in the morning informing them of their layoffs and did not meet with their bosses until hours later. “How can that favor talent?” says one of the people affected.
The layoffs, combined with other factors affecting the entertainment business, from strikes to cuts in content spending, have raised concerns about the future of the company’s ambitions in the sector. These are the questions that have arisen the most about that future, according to conversations with six people close to Prime Video and Amazon MGM Studios.
From left, Amazon MGM Studios Head Jen Salke, Rachel Weisz, Alice Birch and Amazon and MGM Studios Chief Marketing Officer Sue Kroll attend the Dead Ringers premiere in April 2023.
Kevin Mazur/Getty Images for Prime Video
Who is really in charge?
As part of the layoffs, two MGM teams were integrated under Chris Brearton, a business-side executive who joined Amazon with its acquisition of MGM in 2022. At the time, Salke consolidated power when he gained oversight of much of MGM. Several experts saw last week’s team shakeup as a sign that power was shifting away from Salke and toward the financial side of his boss, Mike Hopkins, who has been scrutinizing the studio’s spending since his arrival in 2020. .
What will be cut next?
Layoffs were expected following Amazon’s acquisition of MGM, as is typical in a corporate integration. Amazon has already cut its teams in Africa and the Middle East, and is investing more in northern and central European countries, i follown they reported Deadline and other means. Some sources have stated Business Insider There is speculation that there will be more cuts to development teams.
“We were spending like drunken sailors,” says a second informant. The first predicts a “bloodbath” across Amazon’s six content development teams, including those at Prime Video, Freevee and MGM, a number unheard of for a traditional media company.
How will sports affect spending on original content?
Although the layoffs show that Amazon is putting fewer resources into original TV series and movies, one area of content where it is spending more is live sports. In particular, Amazon paid $11 billion for the exclusive rights to Thursday Night Football of the NFL, which has helped Amazon attract new advertisers and more Prime members after some initial problems.
Amazon has made it clear that it will continue to aggressively pursue live sports. It has just made a minority investment in Diamond Sports, which is bankrupt, which will make Amazon the main broadcaster of one of the largest regional sports networks, the same one that broadcasts half of the games of the MLB, the NHL and the NBA in the United States.
The movements have made several experts in the world of entertainment nervous. Even at Amazon, they say, there’s little money to go around, and more money spent on sports means less for movies.
Some wonder if Amazon, on the other hand, will redouble its commitment to adjacent content, such as sports documentaries, so that fans continue watching them for longer. Amazon already sells its customers subscriptions to rival streaming services, allowing it to fulfill its promise of Everything Store and earn money in many ways.
At least one source wonders if Amazon will one day decide it doesn’t need original content and become a streaming hub for sports and other businesses.
How will ads affect the viewing experience?
Advertising also looms over the entertainment business, as Prime Video is about to become the latest streamer to sell ads in what analysts estimate could be a $7 billion opportunity.
With less than two weeks to go until the ads launch, some creators and creator reps for certain shows say they’re waiting to find out if Amazon will give them any control over when in their productions to run ads. Amazon already digitally inserts products into shows, which upsets some members of its creative community.
Hollywood creatives also wonder whether Amazon will focus on acquiring the most commercial products to support its advertising ambitions and whether the most daring series will have any future on the service.
2024-01-22 05:39:40
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