Hollywood doesn’t understand what Amazon’s tactic is for entertainment

Bloomberg – Hollywood executives say most of the time they don’t understand what Amazon.com Inc.’s (AMZN) strategy is in the entertainment industry.

Amazon has been producing TV shows for as long as Netflix has and has a lot less to show. In a standard week, you can air one or two of the most popular original series in the United States (versus seven or eight on Netflix).

His most popular original films over the past couple of years were finished products that he bought from other studios. And after a brief stint as an awards show favorite, he was overshadowed by the services of Hulu and Apple. And it’s not even about Netflix and HBO.

“Amazon Prime Video has always had trouble defining what it is,” Parrot Analytics wrote in a report earlier this year.

This cannot be ruled out due to budgetary constraints. Netflix has spent more than Amazon over the past decade and has produced a much larger volume of content.

However, Amazon Studios boss Jen Salke has a $ 10 billion budget. If sports are included, Amazon is expected to spend $ 15 billion on programming this year, according to Bloomberg Intelligence. It’s comparable to how much Netflix (and many others) will spend.

Beyond that, however, it still can’t be said that Amazon’s video service (or even its studios) is a flop. Amazon has taken a different approach to entertainment than any other major Hollywood company. It doesn’t fund TV shows to make a profit, at least not independently. It uses entertainment to draw you into its ecosystem and market other products.

We don’t have the numbers to prove whether Amazon’s spending on programs has convinced people to become or remain Prime subscribers. However, we know that Amazon is a very successful company that generated $ 470 billion in sales and $ 33 billion in profits last year. We also know that your advertising business is booming (video is the second contributor of new Prime subscribers after shipping. What does that mean? Not sure).

This is Amazon’s greatest strength, but also its greatest weakness. The company has seemingly unlimited resources and no real need to win, at least not right away. While Netflix and Disney care if the shows bring in new customers or prevent people from canceling (or leaving), the churn rate on Amazon is almost non-existent.

There are still people wondering if Amazon will lose interest and simply shut down its Microsoft or Yahoo-style entertainment studio. While it is always possible, he would not have spent $ 8.45 billion to buy MGM.

Although there are aspects of Amazon’s business where its success is not fully appreciated. It has a large audience in overseas markets such as Western Europe, Japan and India. Amazon is the leading streaming service in Japan and second only to Disney in India, according to Media Partners Asia.

Amazon can afford the long game. Even with MGM, it probably won’t replace Disney as the largest entertainment company in the world. Nor is it necessary. There are worse ways to spend billions of dollars than to finance the art of marketing toilet paper.

Learn more at Bloomberg.com

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