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Analyst: Amazon Besting Netflix in Original Movie Buzz, Revenue

15 May, 2017 By: Erik Gruenwedel

As Netflix reportedly tests increasing prices in Australia, the SVOD pioneer continues to churn out original TV shows with aplomb. While the service’s original TV slate have generated 54 Emmy nominations, movie productions appear wanting when compared with Amazon Studios’ feature films, according to Wedbush Securities analyst Michael Pachter.

Netflix released 15 original TV shows and 10 original movies in Q1, with five TV shows receiving Metacritic scores of 70 and above, and seven scoring below 70 on a scale of 100. TV programs “A Series of Unfortunate Events” and “Five Came Back” scored above 80. Of four Netflix movies rated, all scored below 70.

Metacritic, which is owned by CBS Interactive, bases scoring on a curated average of third-party critic reviews found on the Internet, among other factors. 

By comparison, Amazon Studios’ four original movies generated Metacritc scores from 83 to 96, with Manchester-by-the-Sea and The Salesman each winning Oscars — the first for a streaming service.

“While we expect Amazon to increase its spending on content throughout 2017, Amazon is not yet competing with Netflix on volume,” Pachter wrote in a May 15 note. “We continue to view Amazon content as having higher average quality, but it must increase the quantity of its offering in order to compete favorably with Netflix.”

Undermining Netflix’s movie clout, according to Pachter, is its steadfast policy of releasing titles in theaters and streaming simultaneously.

At Amazon’s presentation at CinemaCon 2017 in Las Vegas, Pachter said industry executives gave a “resounding round of applause” at the e-commerce giant’s commitment to release original movies exclusively in theaters first.

The analyst contends studios typically generate upwards of 50% of a movie’s revenue from the box office — which often bodes well for international distribution.

“So impinging on the theatrical window could hurt the content providers more than they could gain from partnerships with SVOD providers like Netflix, or from releasing in a PVOD window,” Pachter said. “We think Netflix is forgoing an important piece of the content revenue potential by releasing all of its films day-and-date.”

Indeed, most theater operators refuse to screen Netflix movies due to their concurrent streaming video availability.

Regardless, both Netflix and Amazon spent big at this year’s Sundance Film Festival. The competitors reportedly spent $12.5 million and $12 million, respectively, acquiring exclusive rights to Mudbound (Netflix) starring Carey Mulligan and Mary J. Blige, and Judd Apatow dramatic comedy The Big Stick (Amazon).


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