Amazon is firing up investments and generating sizeable business in media and entertainment, indicating the diversified retailing behemoth is becoming an unlikely top-tier, Hollywood-style content company.
In just-released 2021 earnings, Amazon reported its subscription revenue (excluding its AWS cloud tech service) soared to a staggering $31.8 billion, up 26% year over year. That segment spans Amazon Prime, fast growing ad-supported video streamer IMDb TV, digital video, audiobooks, digital music and ebooks; Amazon Prime is both a media (incorporating both video and music streaming) and commerce business, though the others are pure media.
For comparison, a top major movie studio generates just half Amazon’s streaming business; pure video streamer Netflix posted $29.7 billion in 2021 revenue, and Netflix has been considered top-tier media for years.
Within Amazon’s streaming, “Total capitalized costs of video (which the company said is primarily released content) and music were $10.7 billion as of the end of 2021 — up more than 50% from $6.8 billion a year earlier,” wrote Variety’s Todd Spangler.
But wait, there’s more!
Amazon broke out its advertising sales for the first time as a separate business segment, indicating that advertising sales amounted to $31.2 billion in 2021 revenue. That’s a further validation of its transformation into a media/entertainment juggernaut, though admittedly much of that is selling advertising on its own commerce platform.
And Amazon’s media/entertainment footprint will be enlarged if it consummates its proposed $8.45 billion cash acquisition of former major studio MGM. The deal — announced last May — is still awaiting regulatory decisions. MGM possesses the legacy United Artists film library of the James Bond spy flicks, the Rocky boxing movies and prestige films (meanwhile, the legacy MGM film library is now owned by Warner Bros.)
Moving from Amazon revenue to its expense side, another area of economic prowess is “marketing.” Amazon spent $32.5 billion on marketing costs in 2021, an expense category experiencing sharp growth. In 2019, the corresponding marketing expenditure was $18.8 billion, or about half as much. Amazon attributes the sharp increase in that cost category to “increased payroll and related expenses for personnel engaged in marketing and selling activities,” Amazon states in its annual 10K disclosure filing. The marketing figure is company-wide with the bulk supporting Amazon’s core retailing business, with media/entertainment secondary. But that’s still a ginormous number and is a function again putting Amazon squarely in the media/entertainment category.
Amazon’s marketing budget is a weapon that it can use to beat back competitors in any business line and gives rivals 32.5 billion reasons to avoid taking on Amazon directly.
In its earnings, the Seattle-based diversified retailer posted staggering total revenue of $470 billion for 2021 and employs 1.6 million people worldwide. Some of that “diversification” is in media hardware — arguably that’s additional media revenue — such as cell phones and its personal digital assistant Alexa. So, Amazon is covering many silos in the media/entertainment landscape.
Amazon’s Prime Video streaming service turns heads and elevates the company in the Hollywood ecosystem because of its hefty investment in original content. And there’s some high-profile content acquisitions too.
“Since 2018, Prime Video has tripled the number of Amazon Originals,” Amazon chief financial officer Brian Olsavsky said on an earnings conference call. “And this September, Prime Video will also release the highly anticipated the ‘Lord of The Rings: The Rings of Power’ and become the exclusive home of ‘Thursday Night Football’ as part of an historic 11-year agreement with the National Football League.” NFL football is a pricey content acquisition.
Streamers are particularly attuned to prestige movies and TV series, because professional media critics publish commentaries that can elevate a streaming platform.
For example, Amazon’s fourth quarter earnings press release enthused that “’Being the Ricardos” was nominated for two Screen Actors Guild (SAG) Awards (female actor in a leading role Nicole Kidman and male actor in a leading role Javier Bardem) and three Critics Choice Awards (lead actress Nicole Kidman, supporting actor J.K. Simmons, and original screenplay Aaron Sorkin).” “Being the Ricardos” is a dramatic movie about the husband-and-wife team behind TV’s biggest comedy of its era starring the legendary Lucille Ball.
Related content:
Leave a Reply