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Amazon is turbocharging its content spending, with the company disclosing a massive increase in spend on music and video programming in 2022.
Last year was a pivotal one for Amazon Prime Video, with arguably its two most significant content investments hitting the service within weeks of each other: NFL Thursday Night Football and The Lord of the Rings: The Rings of Power. Both debuted in September).
Those programs were reflected in Amazon’s annual report, with the company disclosing that its content expenses rocketed to $16.6 billion in 2022, up 28 percent from $13.0 billion a year prior.
On the company’s earnings call Thursday, Amazon CFO Brian Olsavsky had revealed that of that $16.6 billion figure, “approximately $7 billion” was spent on “Amazon originals, live sports and licensed third- party video content included with Prime.”
He added that in 2021 the company spent “about $5 billion” on that same pool of content, marking a $2 billion annual increase.
While the company did not explicitly break out the rationale for the increase in spend, the debut of Rings of Power Sep. 1 and TNF Sep. 15 are all but assured to be among the culprits. Amazon is paying over $1 billion annually for its NFL rights, and the first season of Rings of Power cost more than $500 million. And those costs do not include the production expenses for TNF, or the marketing costs associated with both programs.
With the rise in spending, Amazon is closing in on Netflix in terms of its content expenses. Netflix executives have said they expect to spend around $18 billion on content this year. Disney, meanwhile, will spend about $33 billion, of which about $11 billion is just on sports programming.
Of course, Amazon’s figure also includes the cost of music offered through its Amazon Music service, as well as some video rental-related costs, hence the $7 billion breakout figure. In other words, it has a ways to go to catch up to companies like Netflix and Disney in an apples-to-apples fashion.
That being said, the company does appear committed to content. Amazon acquired MGM last year in an $8.5 billion deal and touted both its originals and shows like MGM’s Wednesday (which streams on Netflix) in its latest earnings report.
“We regularly evaluate the return on spend and continue to be encouraged by what we see as video has proven to be a strong driver of Prime member engagement and new Prime member acquisition,” Olsavsky added.
It was a point underscored by Amazon CEO Andy Jassy on the call. “If you step back and think about a lot of subscription programs, you know, there are a number of them that are, you know, $14, $15 a month, really for entertainment content, which is more than what Prime is today,” Jassy said, noting all the benefits of a Prime subscription. “That is remarkable value.”
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