Amazon Hits a Fiscal Grand Slam With 2019 Surge

Amazon had a “prime” fourth quarter and fiscal year (ended Dec. 31, 2019) across all its business units, including subscription services. The segment, which includes annual and monthly fees associated with Prime memberships, as well as audiobook, digital video, digital music, e-book, and other non-AWS subscription services, generated more than $5.2 billion in revenue. That was up 32% from services revenue of $3.95 billion during the previous-year period.

On the home entertainment front, Amazon Original series “Hunters” will premiere on Feb. 21. Produced by Academy Award-winner Jordan Peele and starring Academy Award-winner Al Pacino, “Hunters” follows a diverse band of Nazi hunters living in 1977 New York City.

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In the quarter, Prime Video debuted several Original series and movies, including The Report, The Aeronauts, “The Kacey Musgraves Christmas Special,” The Expanse, as well as the return of “The Marvelous Mrs. Maisel,” “Tom Clancy’s Jack Ryan,” and the final season of “The Man in the High Castle.”

Amazon Studios received eight Golden Globe Award nominations, with “Fleabag” winning Best Television Series, Musical or Comedy, as well as Best Performance by an Actress in a Television Series, Musical or Comedy, for Phoebe WallerBridge.

Amazon Music topped more than 55 million customers worldwide in the quarter. Collectively, in the U.S., U.K., Germany, and Japan, Amazon Music customers have grown nearly 50% year-over-year; and in newer marketplaces France, Italy, Spain, and Mexico, Amazon Music customers more than doubled in 2019. Additionally, Amazon Music Unlimited subscribers grew more than 50% in 2019. •

On the streaming media device front, Fire TV now has more than 40 million active users worldwide. Amazon announced the new Fire TV Edition at CES 2020, which includes a set of tools, features, and services that make it even easier for developers, operators, device makers, and manufacturers to integrate Fire TV into their products. BMW and Fiat Chrysler Automobiles are among the first automakers to introduce Fire TV in their future vehicles.

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Founder/CEO Jeff Bezos lauded the results and company for the fourth quarter and fiscal-year results.

Indeed, Amazon hit it out of the park in the quarter and fiscal year. Net sales increased 21% to $87.4 billion in the quarter, compared with $72.4 billion in fourth quarter 2018. Excluding the $120 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 21% compared with fourth quarter 2018.

Operating income increased to $3.9 billion in the quarter, compared with operating income of $3.8 billion in fourth quarter 2018. Net income increased to $3.3 billion in the quarter, compared with net income of $3 billion in fourth quarter 2018.

For 2019, net sales increased 20% to $280.5 billion, compared with $232.9 billion in 2018. Excluding the $2.6 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the year, net sales increased 22% compared with 2018.

Operating income increased to $14.5 billion, compared with operating income of $12.4 billion in 2018. Net income increased to $11.6 billion, or $23.01 per diluted share, compared with net income of $10.1 billion, or $20.14 per diluted share, in 2018.

“Prime members watched double the hours of original movies and TV shows on Prime Video this quarter compared to last year, and Amazon Originals received a record 88 nominations and 26 wins at major awards shows,” Bezos said in a statement. “A huge thank you to teams across Amazon for their dedicated work to build, innovate, and deliver for customers this [winter] holiday.”

Amazon Streaming ‘The Expanse,’ Greenlights Season 4 Production

Amazon Jan. 22 announced it will exclusively stream the first three seasons of sci-fi drama “The Expanse” to Prime members in over 200 countries and territories on Feb. 8. Seasons 1-2 are currently available only in the U.S. on Prime Video and SyFy.com.

The series, which launched in 2015, is also broadcast on NBC Universal’s SyFy network.

Based on novels by James S. A. Corey, “The Expanse” is an award-winning political science fiction series set hundreds of years in the future.

Humans have colonized the solar system with The United Nations controlling Earth and an independent military power inhabiting Mars. Desperate for air and water, the series begins with Earth and Mars on the verge of war over the resources found in the Asteroid Belt. With few options for survival, allies struggle to fight over the future of humanity.

Prime Video will be the new home to Season 4, which launches later this year.

Amazon founder Jeff Bezos made the announcement last May at the National Space Society’s International Space Development Conference in Los Angeles, where the cast and showrunner were in attendance.

Co-created and written by Academy Award nominees Mark Fergus (Iron Man) and Hawk Otsby (Children of Men), the series stars three-time Golden Globe nominee Thomas Jane (Deep Blue Sea), Oscar-nominee Shohreh Asgdashloo (Star Trek: Beyond), Steve Strait (The Covenant), Dominique Tipper (Fantastic Beasts and Where to Find Them), Wes Chatam (The Hunger Games), Cas Anvar (Punisher: War Zone), Frankie Adams (Mortal Engines) and Shawn Doyle (Frequency), Chad L. Coleman (The Walking Dead),  Florence Faivre (The Sia Renaissance), and Cara Gee (Empire of Dirt).

 

 

Why Amazon Should Buy Barnes & Noble

When Amazon launched in 1994, founder Jeff Bezos envisioned his online bookseller competing against local stores and national chains such as Barnes Noble.

And for four years Amazon did just that: Sell books over the Internet more cheaply than anyone else – including Barnes & Noble, which remains one of the last-standing brick-and-mortar book (and packaged media) retailers.

Now Barnes & Noble is in financial trouble. It generated an operating loss of $26.7 million in the most-recent fiscal period. Revenue dipped 2% to $753.2 million.

The Nook segment – B&N’s attempt to compete with Amazon through a branded tablet device and digital (movies, TV shows, music) content – posted a $1.5 million operating loss. Revenue dropped nearly 17% to $21.7 million from $25.9 million last year.

The company hasn’t turned a fiscal profit in nearly two years. It is in litigation with its former CEO over inappropriate workplace behavior allegations and facing a make-or-break winter holiday period – at a time when sales should be booming.

As the retailer looks at “strategic” alternatives, including selling the company – Amazon, by comparison, is minting money.

Having long ago expanded beyond pulp fiction selling merchandise of every variety, in addition to Web services and retail grocery (Whole Foods), the company just posted its best-ever Cyber Monday, with customers ordering more than 180 million items through the five-day Thanksgiving weekend period.

Amazon ended the recent fiscal period with $56 billion in sales and profit approaching $3 billion.

Bezos is one of the richest, if not the wealthiest person on Earth. In 2013, he bought money-losing The Washington Post for $250 million – part vanity play and part attempt to support democracy.

Earlier this year the company became Mercedes-Benz’ largest single customer for the Sprinter van – a fleet order many speculate the company will use for local deliveries.

Acquiring Barnes & Noble would give Amazon 633 retail/distribution locations – many in prime mall locations.

The Amazon/Barnes & Noble store would have lots of cost synergies, including ramping up branded Amazon Go cashier-less convenience concept, showcasing the Amazon connected home (Kindle, Fire TV, Echo Dot, Ring doorbell, banking, etc.) – and selling books.

Jeff Bezos: ‘Amazon Not Too Big to Fail’

With a market cap approaching $800 billion, and fresh off a well-publicized search for a second corporate headquarter that saw hundreds of cities and local governments outbid each other with billions in incentives, Amazon’s perch atop the retail/e-commerce food chain would appear eternal.

Not so, according to founder/CEO Jeff Bezos, who, when reportedly asked about the burgeoning growth of the company and its ramifications in a staff meeting at the Seattle headquarters, said Amazon would one day perish.

“Amazon is not too big to fail,” said Bezos, according to a recording of the Nov. 8 meeting obtained by CNBC. “In fact, I predict one day Amazon will fail. Amazon will go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years.”

Bold talk considering Amazon has generated more than $7 billion in profit and $160 billion in revenue in just nine months this year. The company remains one of the largest retailers of packaged and digital media.

And despite spending billions on original content, Amazon continues to promote the “free” Prime Video streaming video service largely as a loss-leader marketing tool – a strategy that unnerves Netflix co-founder/CEO Reed Hastings.

“They are so scary,” Hastings told CNBC in a separate interview last year. “Everything Amazon does is so amazing. How are they doing so many business areas so well? We are continuing to watch them and be impressed with them.”

The company has more than 600,000 employees globally, with plans to add 50,000 more between new co-headquarters in Arlington, Va., and Queens, N.Y.

Amazon is also adding 5,000 employees to a tech center in Nashville, Tenn.

But Bezos warned that failure often follows companies that become more involved with their image than the needs of their customers.

“That will be the beginning of the end,” Bezos said. “We have to try and delay that day for as long as possible.”

But as CNBC learned talking to some Amazon employees, internal image is not what concerns most staffers. Instead, government regulation and antitrust issues do.

Indeed, the European Union and Japan are separately looking into antitrust issues involving Amazon merchant data. In the United States, President Trump has long voiced concern about Amazon’s relationship with the U.S. Postal Service, taxes, impact on small retailers and other issues.

Some observers contend Trump’s apparent animus against Amazon is largely fueled by the fact that The Washington Post, which is owned by Bezos, often criticizes the president and his policies in print and online.

 

Amazon’s New Co-HQs: Arlington, Virginia, and New York City

Amazon on Nov. 13 announced that it has selected New York City and Arlington, Virginia, as the locations for the company’s new co-headquarters.

Amazon, in a news release, says it will invest $5 billion and create more than 50,000 jobs across the two locations, with more than 25,000 employees each in New York City and Arlington.

The new locations will join Seattle as the company’s three headquarters in North America.

In addition, Amazon said it has selected Nashville for a new Center of Excellence for its Operations business, which is responsible for the company’s customer fulfillment, transportation, supply chain, and other similar activities. The Operations Center of Excellence in Nashville will create more than 5,000 jobs.

The new Arlington headquarters, in the Washington, D.C., metro area, will be located in National Landing, while the New York City headquarters will be located in the Long Island City neighborhood in Queens.

Amazon says its investments in each new headquarters will spur the creation of tens of thousands of additional jobs in the surrounding communities. Hiring at both the new headquarters will begin in 2019.

The Operations Center of Excellence will be located in downtown Nashville as part of a new development site just north of the Gulch, and hiring will also begin in 2019.

“We are excited to build new headquarters in New York City and Northern Virginia,” Jeff Bezos, founder and CEO of Amazon, said in a statement. “These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come. The team did a great job selecting these sites, and we look forward to becoming an even bigger part of these communities.”

New York City

In New York City, Amazon says the city will benefit from more than 25,000 full-time jobs; approximately $2.5 billion in Amazon investment; 4 million square feet of energy-efficient office space with an opportunity to expand to 8 million square feet; and an estimated incremental tax revenue of more than $10 billion over the next 20 years as a result of Amazon’s investment and job creation.

Amazon will receive performance-based direct incentives of $1.525 billion based on the company creating 25,000 jobs in Long Island City. This includes a refundable tax credit through New York state’s Excelsior Program of up to $1.2 billion calculated as a percentage of the salaries Amazon expects to pay employees over the next 10 years, which equates to $48,000 per job for 25,000 jobs with an average wage of over $150,000; and a cash grant from Empire State Development of $325 million based on the square footage of buildings occupied in the next 10 years.

Amazon will receive these incentives over the next decade based on the incremental jobs it creates each year and as it reaches building occupancy targets. The company will separately apply for as-of-right incentives including New York City’s Industrial & Commercial Abatement Program (ICAP) and New York City’s Relocation and Employment Assistance Program (REAP).

Amazon says the community will benefit from New York City providing funding through a Payment In Lieu Of Tax (PILOT) program based on Amazon’s property taxes on a portion of the development site to fund community infrastructure improvements developed through input from residents during the planning process. Amazon has agreed to donate space on its campus for a tech startup incubator and for use by artists and industrial businesses, and Amazon will donate a site for a new primary or intermediary public school. The company will also invest in infrastructure improvements and new green spaces.

Arlington, Virginia

In Arlington, Virginia, the National Landing site is an urban community less than 3 miles from downtown Washington, D.C. The area is served by three Metro stations, commuter rail access, and Reagan National Airport – all within walking distance. Amazon says Virginia and Arlington will benefit from more than 25,000 full-time high-paying jobs; approximately $2.5 billion in Amazon investment; 4 million square feet of energy-efficient office space with the opportunity to expand to 8 million square feet; and an estimated incremental tax revenue of $3.2 billion over the next 20 years as a result of Amazon’s investment and job creation.

Amazon will receive performance-based direct incentives of $573 million based on the company creating 25,000 jobs with an average wage of over $150,000 in Arlington. This includes a workforce cash grant from the Commonwealth of Virginia of up to $550 million based on $22,000 for each job created over the next 12 years. Amazon will only receive this incentive if it creates the forecasted high-paying jobs. The company will also receive a cash grant from Arlington of $23 million over 15 years based on the incremental growth of the existing local Transient Occupancy Tax, a tax on hotel rooms.

Amazon says the Arlington community and Amazon employees will benefit from the Commonwealth investing $195 million in infrastructure in the neighborhood, including improvements to the Crystal City and the Potomac Yards Metro stations; a pedestrian bridge connecting National Landing and Reagan National Airport; and work to improve safety, accessibility, and the pedestrian experience crossing Route 1 over the next 10 years. Arlington will also dedicate an estimated $28 million based on 12% of future property tax revenues earned from an existing Tax Increment Financing (TIF) district for on-site infrastructure and open space in National Landing.

Nashville

The Nashville Center of Excellence will be located in downtown, along the Cumberland River, Amazon says. As part of Amazon’s investment, Tennessee, Davidson County and the city of Nashville will benefit from 5,000 full-time, high-paying jobs; over $230 million in investment; 1 million square feet of energy-efficient office space; and an estimated incremental tax revenue of more than $1 billion over the next 10 years as a result of Amazon’s investment and job creation.

Amazon will receive performance-based direct incentives of up to $102 million based on the company creating 5,000 jobs with an average wage of over $150,000 in Nashville. This includes a cash grant for capital expenditures from the state of Tennessee of $65 million based on the company creating 5,000 jobs over the next seven years, which is equivalent to $13,000 per job; a cash grant from the city of Nashville of up to $15 million based on $500 for each job created over the next seven years; and a job tax credit to offset franchise and excise taxes from the state of Tennessee of $21.7 million based on $4,500 per new job over the next seven years.

Amazon Prime Day: Lots of Home Entertainment Deals

Amazon’s website and app may have glitches. Fulfillment center workers in Europe are on strike. But that hasn’t put much of dent (thus far) into the ecommerce behemoth’s 36-hour “Prime Day” retail extravaganza, which ends July 17 at 11:59 p.m. PT.

“Nobody does any business in July … Amazon intends to take over the world, and they’re doing a pretty darn good job of it,” retail consultant Jan Kniffen told CNBC last year.

Day 1 (July 16) saw Amazon’s stock hit a record $1,841.95 per share, making founder/CEO Jeff Bezos the world’s richest person (cracking $150 billion in net worth) in modern history – exceeding No. 2 Microsoft co-founder Bill Gates’ net worth by $55 billion!

Amazon shares declined following Netflix’s subscriber growth miss to close at $1,822.49 per share.

Amazon’s website suffered temporary outages at the begin of Prime Day, which analysts attributed to user demand and resulted in some lost sales.

“I think it [was] more of an impact on the customer experience and consumers who tried to get on the site and couldn’t find anything and realized they would have to come back,” Sucharita Kodali with Forrester Research told CNBC.

Prime Day’s offerings feature myriad packaged media deals, including hundreds of $14.99 4K UHD Blu-ray movies such as The Dark Crystal, Terminator 2: Judgement Day, Batman v. Superman – Dawn of Justice, John Wick, The Incredible Hulk, Apollo 13, The Accountant, Starship Troopers, E.T. The Extra-Terrestrial, Dredd, Battleship, The Mummy, Lone Survivor, Everest, King Kong, and Close Encounters of the Third Kind, among others.

Boxed sets include, Paramount Home Media Distribution’s The Godfather 3-Movie Collection($10.20), HBO’s Game of Thrones Seasons 1-7($74.99), and Warner Bros. Home Entertainment’s Harry Potter Complete 8-Film Collection 4K UHD($79.98).

Streaming media deals include Fire TV Stick with Alexa voice remote ($19.99), Fire TV with 4K Ultra HD and Alexa voice remote ($34.99), and Fire TV Cube with wireless Echo speakers ($89.99).

TCL 32-inch and 40-inch Roku TVs for $129.99 ($70 off) and $194.99 ($95 off), respectively. Toshiba 50-inch Amazon Fire TV Edition for $289.99 ($110 off), and LG 55-inch and 65-inch OLED TVs for $1,696.99 ($300 off) and $2,296.99, respectively.

 

Amazon, Netflix Moving in Opposite Directions on Original Content

Amazon Prime Video and Netflix may be ensnarled in a content spending arms race, but Amazon (which is spending $6 billion on content in 2018) is taking a different approach than the SVOD pioneer (and chief rival) when it comes to greenlighting original programming.

While Netflix will spend upwards of $8 billion on original content this year – with an emphasis on diversity as well as pushing the envelope creatively – Amazon Studios is taking a more measured route, according to Wedbush Securities analyst Michael Pachter.

Amazon Studios in April quietly ended the practice of soliciting scripts and concept submissions from the public – an innovative strategy it pioneered in 2010 offering up to $2.7 million to filmmakers and screenwriters (without industry representation) whose material was approved for pilot consideration.

The studio – under new boss Jennifer Salke – is reportedly eyeing content for the young adult genre, in addition to programming with mainstream global appeal, such as “The Grand Tour,” the 2016 reboot of the BBC’s “Top Gear” reality motor car series featuring the original cast.

It greenlighted “Utopia,” a series from Gone Girl novelist/screenwriter Gillian Flynn about a group of young social media-savvy adults being chased by a “deep-state” organization.

“We are huge fans of Gillian’s electrifying work,” Nick Hall, head of alternative series for Amazon Studios, said in a statement earlier this year. “She crafts stories that hold her audience in a constant state of suspense and subverts the expectations behind her characters. She will deliver Prime Video members a series they won’t forget, and ‘Utopia’s’ relevance is sure to connect with viewers around the globe.”

Amazon also inked rights to a new series based on the Lord of the Rings from “This is Us” director Dan Fogelman. It also has a first-look deal with Kenneth Lonergan, director of Amazon’s Oscar-winning Manchester by the Sea.

“[We want] big shows that can make the biggest difference around the world,” Amazon founder/CEO Jeff Bezos told Variety.

Indeed, Amazon opted not to greenlight three pilots approved by Prime members, in addition to canceling “One Mississippi” (after two seasons), “I Love Dick” (after one season), and “Jean-Claude Van Johnson” (after one season).

“Going forward we expect fewer new series from Amazon, with more resources deployed towards proven projects and larger scale productions,” Pachter wrote in a July 2 note.

Amazon Tops 100 Million Prime Members Globally

Amazon April 18 announced for the first time (in a shareholder letter) it has exceeded  100 million Prime members globally since launching the $99 annual membership loyalty platform with free two-day shipping 13 years ago.

Prime membership includes free access to Prime Video, Prime Photo, Twitch Prime (video games), Prime Now deliveries and Prime Music, among other services.

The tally comes two days after Prime Video rival Netflix said it ended the first quarter (March 31) with 125 million subscribers worldwide.

In the letter, founder/CEO Jeff Bezos said Amazon turns 20 years-old in 2018, employing more than 560,000 people. Bezos reiterated that Prime Video continues to drive Prime member adoption and retention.

As a result, Amazon Studios significantly upped original content in 2017, including “The Marvelous Mrs. Maisel,” winner of two Critics’ Choice Awards and two Golden Globes, and the Oscar-nominated movie The Big Sick.

“We’ve expanded our slate of programming across the globe, launching new seasons of LA cop drama “Bosch” and grifter drama “Sneaky Pete,” starring Giovanni Ribisi from the U.S., “The Grand Tour” from the U.K., and first original German series, “You Are Wanted,” while adding new “Sentosha” shows from Japan, along with “Breathe” and the award-winning “Inside Edge” from India,” Bezos wrote.

Amazon also expanded third-party over-the-top video platform – Prime Channels – adding CBS All Access in the U.S. and launching Prime Channels in the U.K. and Germany.

“We debuted “NFL Thursday Night Football” on Prime Video, with more than 18 million total viewers over 11 games. In 2017, Prime Video Direct secured subscription video rights for more than 3,000 feature films and committed over $18 million in royalties to independent filmmakers and other rights holders,” wrote Bezos.

The executive said Amazon Studios is looking forward to upcoming Prime Original series pipeline, which includes “Tom Clancy’s Jack Ryan,” starring John Krasinski; “King Lear,” starring Anthony Hopkins and Emma Thompson; “The Romanoffs,” executive produced by Matt Weiner; “Carnival Row,” starring Orlando Bloom and Cara Delevingne; “Good Omens,” starring Jon Hamm; and “Homecoming,” featuring Julia Roberts in her first television series.

As previously reported, Amazon acquired the global TV rights for a multi-season production of “The Lord of the Rings,” as well as “Cortés,” a miniseries based on the epic saga of Hernán Cortés from executive producer Steven Spielberg, starring Javier Bardem.

“We look forward to beginning work on those shows this year,” Bezos said.

 

Best Buy Embedding Amazon Fire Streaming Player in Branded TVs

Retail rivals Amazon and Best Buy April 18 announced a deal to bring the next generation of the ecommerce giant’s Fire TV streaming media player/app to smart TVs in the United States and Canada. Best Buy will launch a series of 4K UHD and HD Fire TV Edition models featuring Alexa voice-recognition software from house brand Insignia and Toshiba, beginning this summer.

“Amazon and Best Buy have a long history of working together, and today we take our partnership to a new level,” Jeff Bezos, founder and CEO of Amazon, said in a statement. “We could not have a better partner in this endeavor.”

Indeed, Best Buy, the nation’s largest consumer electronics retailer, has partnered with CE brands – Apple, Microsoft, LG and Samsung – devoting floor space and company personnel to branded in-store departments.

“Our goal is to enrich the lives of our customers by offering them the very best products and services, whether they come to us online, visit our stores, or invite us into their home,” said CEO Hubert Joly, alluding to the chain’s in-home Geek Squad tech support.

The newly designed smart TVs with Fire TV meld live over-the-air TV with streaming video into one location. Consumers can use Alexa to search for and watch broadcast content, or choose from a catalog of streaming video from Netflix, Amazon Prime Video, HBO Now, PlayStation Vue, and Hulu, among others. Fire TV Edition can also be paired with any Echo wireless speaker device.

Amazon Prime Video Viewership Revealed

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.