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.

 

Amazon CFO: Voice-Activated Alexa a ‘Positive Surprise’

Amazon hit a fiscal Q4 home run in North America. One of the revenue drivers was the Echo Dot featuring voice-activated Alexa software.

With more than 30,000 skills, Amazon embeds Alexa in more than 4,000 smart-home devices from 1,200 third-party CE brands.

Proprietary Fire TV Stick and Echo were the best-selling products in 2017 across all of Amazon. Both devices enable users to search, stream and buy movies and TV shows using voice commands. Echo can now – finally – also send text messages.

“We are very happy with the results of Alexa, it’s a very positive surprise for us,” CFO Brian Olsavsky said on the Feb. 1 fiscal call.

The executive said Alexa use on Fire TV is up 900% from a year ago, with music consumption up 300% over the winter holidays.

“That’s far exceeding our expectations,” Olsavsky said. “The relationship with external companies is actually helping to accelerate the adoption of Alexa with customers.”

Separately, Amazon wants to emulate North American success internationally, notably in India, which includes 17% of the world’s population, or 1.32 billion people.

The e-commerce behemoth bowed Prime India in July 2016, followed by the global launch of Prime Video in December 2016. Olsavsky said Prime adoption in India was the fastest in Amazon’s history, featuring more than 25 million local products.

Amazon also launched Prime in the Netherlands and Luxembourg, adding the ability for customers in Belgium to shop in Dutch.

Finally, Amazon this year launches second seasons of “Goliath” and “Sneaky Pete,” followed by the third season of “The Man in the High Castle,” the fourth season of “Bosch,” and “Mozart in the Jungle.” Other original content includes new episodes from “The Tick,” “Tom Clancy’s Jack Ryan,” and “The Romanoffs.”

SVOD, Studios Ready Super Bowl LII Ads

Amazon Studios will showcase its first Super Bowl ad for a TV show or movie when it airs a trailer for episodic series, “Tom Clancy’s Jack Ryan,” starring John Krasinski (“The Office”) – the fifth actor to play the title character after Alec Baldwin in The Hunt for Red October in 1990.

Amazon will also run a humorous ad for voice-controlled Alexa losing her voice, with baffled CEO Jeff Bezos asking, “How is that even possible?”

“People are aware of Prime video, but they’re not always aware that they get this award-winning programming as part of the membership,” Mike Benson, head of marketing for Amazon Studios, told The Los Angeles Times.

The Big Game, which boasts a domestic TV audience of 100 million, again promises to be a showcase for Hollywood studios and subscription streaming video mainstays spending upwards millions per spot.

Few studio ads have been confirmed, but online speculation is rampant.

Paramount Pictures has myriad options, including spots for Krasinski’s horror thriller, A Quiet Place, in addition to Tom Cruise’s Mission: Impossible – Fallout, among others.  Universal Pictures has spots for Jurassic World: Fallen Kingdom, Dwayne Johnson’s Skyscraper and Fifty Shades Freed.

Walt Disney Studios could run ads for Black Panther and Avengers: Infinity Wars, among others. Warner Bros., Sony Pictures and 20th Century Fox reportedly are not airing ads.

Hulu, which aired a 2017 Super Bowl ad for original series, “The Handmaid’s Tale,” undoubtedly will run another spot considering corporate co-owner Comcast (NBC Sports) is broadcasting the game.

Netflix might air an ad for a Cloverfield sequel. The third installment in the franchise originally was set to be distributed by Paramount, until it wasn’t. Scuttlebutt at the Sundance Film Festival had Netflix acquiring global rights.

Amazon Raising Monthly Prime Membership Fee

Amazon is upping the Prime membership fee by 18% for consumers opting to pay on a monthly basis. The $99 annual Prime membership, which includes Prime Video, remains the same.

Amazon said the $10.99 monthly Prime membership is increasing to $12.99, or $156 per year. The ecommerce behemoth is also upping the college student Prime monthly membership to $6.49 from $5.49.

“Prime provides an unparalleled combination of shipping, shopping and entertainment benefits, and we continue to invest in making Prime even more valuable for our members,” Amazon said in a statement.

Amazon, which just announced the 20 cities it is considering for its second headquarters, said it has increased free two-day shipping from 20 million items to more than 100 million.

 

Amazon Bridging the Netflix Divide?

Reed Hastings’ “awfully scary” competitor – Amazon – is gaining traction, narrowing the divide with the subscription streaming video pioneer, according to some observers.

With more than 100 million subscribers worldwide and growing, Netflix wouldn’t appear to have concern about any competitor. But Amazon is much more than over-the-top video. It is an ecommerce behemoth capable of treating video as a loss leader.

“How are they doing so many business areas so well?” Hastings told CNBC last May. “They are trying to repeal the basic laws of business. They are awfully scary I would say.”

Indeed, there were about 44 million subscribers to Prime Video, with a little more than 30 million from the United States and 11 million from Germany, Japan and the United Kingdom, according to IHS Markit.

Prime Video subscriptions are projected to grow to 78 million by 2021.

More importantly, Amazon Prime, which includes video, music and other services, is now available in 16 countries. Prime members account for almost 99% of the total Prime Video subscription user base.

In fact, Amazon’s attempt at standalone Prime Video internationally has struggled as due to geographic content license challenges. IHS says Prime Video offering are not consistent across countries, with details of both Prime and Prime Video modules differing significantly by country.

Yet, Prime Video boasts a higher subscriber count in a few select markets than Netflix – due primarily to the perceived value of the bundled Prime ecosystem.

Using the value of the Prime bundle, Prime Video have already managed to surpass Netflix subs in Germany, India and Japan, according to IHS.

Prime Video has grown beyond catalog TV shows and movies. It now features à la carte third-party video services through Amazon Channels, live sports and user-generated content.

This diversity of content enables Amazon to tap into markets and customers that global rival Netflix has yet to reach.

“Although predominantly an e-commerce company, Amazon is making full use of its video services to spread its brand name across the world, push its Prime product in localized markets and draw people into the Amazon ecosystem,” Max Signorelli, research analyst, home entertainment, IHS Markit, said in a statement.