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CFO: Amazon Prime Increases Physical Media Sales

23 Oct, 2014 By: Erik Gruenwedel

Increased sales of movies and TV show discs, books and music in physical form are some of the driving forces behind Amazon’s ongoing financial investment in Amazon Prime, CFO Tom Szkutak told investors.

Prime is the $99 annual membership loyalty program that offers free two-day shipping on myriad products, in addition to unlimited streaming of movies, TV shows and original programing.

Speaking Oct. 23 during the e-commerce behemoth’s third-quarter fiscal call, Szkutak said Amazon would continue to invest significantly in Prime, including Prime Video, which saw more than $100 million in content spending in the quarter.

The executive said Prime members who stream content are renewing at “considerably” higher rates than members who don’t stream. He said the conversion rate for free trial members who stream compared with those who don’t also is significantly higher.

Szkutak said that Prime members buy more packaged-media content — notably discs — than non-Prime members. As a result, Amazon remains in an “investment mode” regarding expanding and supporting the Prime platform.

“It’s been a great impact for us. We’re seeing similar trends in terms how much physical product they’re purchasing from us,” Szkutak said. “We like what we see.”

The CFO added that upstart original series “Transparent,” starring Jeffrey Tambor, has done exceptionally well with critics and viewers since its Sept. 26 debut.

“We think it’s an exciting area for our customers,” he said.

Meanwhile, Amazon reported a third-quarter net loss of $437 million on sales of $20.5 billion, compared with a loss of $41 million on revenue of $17 billion during the prior-year period.

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