Amazon looks to produce original movies to grow its Prime program
Why Amazon's stock has soared over the last month (Part 9 of 10)
Amazon plans to produce original movies
In the previous part of this series, we discussed how Amazon’s (AMZN) Prime program adoption is increasing fast. Although the guaranteed two-day delivery is an attractive part of this program, the video streaming service is another attractive feature.
Amazon is now looking to produce and acquire 12 original movies a year. This move should help the company reduce the time a movie takes to premiere on the Amazon Prime Instant Video service to just four to eight weeks after its theatrical debut. Typically, it takes 39 to 52 weeks for a movie to premiere on Prime Instant Video.
This initiative will be led by independent film visionary Ted Hope. Hope was instrumental in producing films such as Eat Drink Man Woman and Crouching Tiger, Hidden Dragon. On the topic of Crouching Tiger, Netflix (NFLX) is planning to produce the sequel to this movie—Crouching Tiger, Hidden Dragon: The Green Legend, this year.
Netflix remains the leading paid video subscription service in the US. This finding was confirmed by a report from Comscore, which mentioned that about 42% of US households subscribed to the paid digital video subscription service as of August 2014. And 32% of total households subscribed to Netflix, while 19% subscribed to Amazon Instant Video. Hulu Plus saw subscriptions from 9% of households.
Amazon has forged partnerships with content producers in the past
Apart from producing original movies, Amazon continues to acquire a number of TV series. Last year, Amazon had signed a licensing agreement with Twenty-First Century Fox’s (FOXA) television distribution arm for exclusive subscription rights to some popular TV shows and movies. A few months ago, Amazon announced that it had reached a deal with HBO , owned by Time Warner (TWX), to offer some older HBO shows on its video streaming service.
To get exposure to Amazon, you could invest in the SPDR S&P Retail ETF (XRT), which invests 1.1% of its holdings in Amazon.
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