Amazon shows video as Prime’s main driver; Content spending in 2022, including music, will reach $16.6 billion

UPDATED with Content release statistics from Annual Report: According to Amazon, total spending on video and music was $16.6 billion last year, compared to $13 billion in 2021.

Video and music costs include licensing and production costs related to content offered as part of Amazon Prime membership, as well as costs related to digital subscriptions and content sold or rented, according to the company’s latest annual report, which was published yesterday on its financial figures in the fourth quarter followed.

During an earnings call Thursday, CFO Brian Olsavsky noted that Amazon will spend $7 billion on originals, live sports and licensed content through 2022, up from $5 billion a year earlier. It’s unclear whether those numbers include all global video content, which is becoming increasingly important in Amazon’s strategy to increase membership of Prime, the world’s largest loyalty program and the beating heart of the company.

Amazon (which acquired MGM for $8.5 billion in cash last year) is closely evaluating the profitability of all its businesses, and Olsavsky said, “We remain encouraged by what we’re seeing, as video is a strong driver of… demonstrated the participation of Prime members and the recruitment of new top members.” The Lord of the Rings: The Rings of Power which ended its first season in the fourth quarter, generated more Prime sign-ups worldwide during the launch period than any previous Prime Video content.

Content still makes up a small part of the giant’s total cost of sales, which totaled $289 billion last year.

CEO Andy Jassy also got involved. He took over from Jeff Bezos in May 2021 after a Covid business boom for the company. It followed disruptions from the war between Russia and Ukraine, soaring inflation, high interest rates and an uncertain economy, all of which caught up to him. Growth in core e-commerce and Amazon Web Services slowed last quarter. When asked about priorities in the current climate, he listed a few things the company is leaning toward, including entertainment.

“We’re very excited about our investment in streaming entertainment, home appliances, satellite (Project Kuiper), healthcare and a few other things,” he said. “Do I think all our new investments will be successful? History would say it would be a gamble. But only one or two are needed.”

EARLIERAmazon today announced that its fourth-quarter sales rose 9% to $149 billion, better than forecast, due to a sharp decline in net income that made the three months ended December its least profitable holiday quarter, which the e-commerce giant once recorded.

Online sales and web services both underperformed as both consumers and businesses cut spending in a world of high inflation and high interest rates. The company, which thrived during Covid when online shopping exploded, is still struggling with a post-pandemic hangover as more people return to brick-and-mortar stores.

Entertainment, still a small piece of the pie and not breaking out, got a lot of ink, especially in the earnings report The Lord of the Rings: The Rings of Power Unpleasant Thursday night football.

North America segment revenue rose 13% year-over-year to $93 billion. International segment revenue fell 8% year over year to $34.5 billion, or increased 5% excluding currency movements.

Net income fell to just under $300 million, or 3 cents a share, in the fourth quarter, from $14.3 billion, or $1.39. The company lost money all year, with $2.7 billion in red ink for the first time since 2014. That was largely due to its investment in electric car maker Rivian. Approximately $2.7 billion in Q4 fees included $640 million in severance costs. Mass layoffs at Amazon mirror the rest of the tech sector.

Its web services division’s flagship, AWS, saw revenue grow 20% year over year to $21.4 billion.

Advertising revenue of $11.56 billion, an increase of 19%, was slightly higher than expected, with growth outstripping that of peers such as Snap, Facebook and Google.

The company lists the first season of The Lord of the Rings: The Rings of Power attracted more than 100 million viewers worldwide. It was the most-watched Amazon Original series in every region of the world, with more than 24 billion minutes streamed and more Prime sign-ups during the launch period than any previous Prime Video content.

Amazon Studios also announced the all-female directors – Charlotte Brändström, Sanaa Hamri and Louise Hooper – for the second season of The Lord of the Rings: The Rings of Powerwhich is currently manufactured in Great Britain.

That was said to be the end of it Thursday night football Season with the youngest median age of any NFL broadcast since 2013 and an 11% increase from last season among 18-34 year olds, according to Nielsen Media Research. TNF showed the most-streamed NFL games of all time, with an average audience of 11.3 million viewers, according to combined data from first-party statistics from Amazon and Nielsen Media Research.

Original series and movie premieres, including western dramas The Englishwith Emily Blunt; family friendly competition show DR Seuss Baking Challenge; my policemanwith Harry Styles; and documentary Good night Oppie. Prime Video also released new seasons of existing series, including the fourth installment of Rihanna’s annual fashion adventure Wild X Fenty and the third season of Jack Ryan by Tom Clancywith John Krasinski. WednesdayAn MGM-produced series on Netflix, debuted at #1 on Nielsen’s weekly streaming chart and received Golden Globe nominations for Outstanding Musical or Comedy Series and Outstanding Actress in a Musical or Comedy Series (Jenna Ortega).

Amazon also brought HBO back to Prime Video Channels in the US following a deal with Warner Bros. Discovery. For $15.99 per month, customers who subscribe to HBO Max can access approximately 15,000 hours of curated premium content.

The relentless focus on providing the widest selection, exceptional value and fast delivery ensured that customer demand at our stores exceeded our expectations in the fourth quarter – and we are grateful to all our customers who participated in the Holidays to Amazon.” says CEO. Andy Jassy, ​​​​”We are also encouraged by the continued progress we are making in reducing our service costs in the operational part of our store business. We face an uncertain economy in the near future, but we remain quite optimistic about Amazon’s long-term prospects over the long term. The vast majority of total market share in both global retail and IT is still in brick-and-mortar stores and on-premises data centers, and as this equation continues to reverse, we believe that we leading customer experiences in these areas, combined with the results of our continued hard work and invention, will translate into significant growth at any improvement for years to come.If you also our investments and innovations in various other end-to -end-customer experiences considered (e.g., streaming entertainment, consumer-centric healthcare, broadband satellite connectivity serving more communities worldwide), there are b additional reason to be optimistic about what the future holds.”