Amazon.com is ramping up its dollars it is spending on the creating as well as licensing of films and television shows, signaling that the e-commerce giant is planning to stay in show business long term.
The issue was at the forefront of the attention of investors last week as Amazon said an increase in spending on video projects would be one of several different reasons it may post a loss for the ongoing quarter even though it expects its overall sales to be over $39 billion.
Shares of the company, though this year up over 33%, have dropped by 5% since last week’s warning.
Analysts on Wall Street estimate the spending by Amazon on content will triple to over $4.5 billion by the end of 2017 from its figure of 2014.
Catching the attention of customers with video is now one of the businesses biggest investments said people in the know. Amazon does not release a breakdown of its spending figures, and declined to make a comment related to that.
The company visibly increased the footprint it has in Hollywood since it opened a studio nearby in 2010, and earlier this year earned its first Academy Award.
One analyst on Wall Street said he expects Amazon to quickly surpass Netflix’s annual rate of spending for video. He also estimates that Netflix, the top streaming service online, will spend over $6 billion in 2017 for content.
The investment into original content that is fast growing at Amazon is only one of many moves taking place simultaneously at Amazon into new areas that include retailing in brick and mortar locations and the planned acquisition recently announced of Whole Foods Market.
Amazon has been reluctant in releasing details for investors related to where it continues to spend extra on its content or why, which makes it difficult to evaluate as to if it is working.
Overall, Amazon said that video was a key benefit of its Prime Club, whose subscribers tend to purchase more goods on Amazon plus pay an annual fee.
One of the those close to the situation said that Amazon has economists and data scientists running different computer models in order to determine how video is able to influence shoppers into signing up for its Prime club after using its free trial offer.
Despite winning awards and producing success television shows, the push into Hollywood has not been easy for Amazon.