March 15, 2018
Amazon Prime Video reportedly generated 26 million initial viewers for original programs in early 2017, including 5 million viewers for top shows such as “The Man in the High Castle,” “Transparent,” “Mozart in the Jungle,” and ‘The Grand Tour.”
Subscription streaming video heavyweights Netflix and Amazon Prime Video have staunchly refused to reveal viewership (or ratings) for their ad-free original programs, citing lack of required advertiser justification. It’s a stance that irritates ad-supported TV broadcasters beholden to live-or-die ratings.
Now, internal documents obtained by Reuters reveal in part why original programing is driving Netflix and Amazon to spend $8 billion and $5 billion, respectively, on programing in 2018: New subscribers. It’s growth that drives revenue – and that’s what Wall Street loves.
With Prime Video a free component of Amazon’s $99 annual Prime free two-day shipping membership program, original episodic programs and movies drive subscriber growth, which in turn drives growth of other items on Amazon – including movies.
Unlike Netflix, which reveals (if not champions) subscriber data, Amazon refuses to disclose Prime membership data, which was estimated to top 54 million in the United States at the end of 2015, according to a Consumer Intelligence Research Partners survey.
In a separate 2016 survey from “CutCableToday” of 380 Prime members, 40% said they rented or bought movies not available on Prime Video from Amazon Instant Video on a monthly basis. The survey also found that 20% of Prime members don’t use Prime Video.
“When we win a Golden Globe, it helps us sell more shoes,” Amazon founder/CEO Jeff Bezos told a 2016 tech confab. It’s an outlook CFO Brian Olsavsky drones on monotonously in Amazon’s conference calls.
Reuters reported that “High Castle,” which is an adaption of Philip Dick’s 1962 alternate historical fiction showcasing Axis powers Germany, Japan and Italy having won World War II, cost $72 million in first season production and marketing.
It reportedly generated 1.15 million new Prime subscribers, or about $63 in subscriber acquisition costs – 36% below the annual Prime membership fee.