Amazon CFO: Prime Instant Video Usage Up ‘Dramatically’

29 Jan, 2013 By: Erik Gruenwedel

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Fourth-quarter media sales up 13%, topping $2.9 billion

Amazon Jan. 29 said consumers streamed TV shows and select movies in greater numbers in the fourth quarter as members of the Prime loyalty program.

CFO Tom Szkutak, in an analysts’ call to discuss fiscal results, said consumer adoption of Prime Instant Video subscription video-on-demand remains strong. Again, Szkutak provided few specifics regarding actual SVOD usage since viewers are technically a component of the Prime discount shipping program.

“The percentage of Prime customers who are watching free content through Prime Video has gone up dramatically year-over-year,” Szkutak said. “We’ve also increased Prime membership dramatically.

The CFO said consumers are also purchasing more digital content, including movies and episodic TV shows. He added that a new program that includes a cloud-based MP3 file of a music CD is going well.

“I can’t give specifics for [consumer] attach rates, but the business is making progress on the video content side,” Szkutak said.

Amazon heralded new Prime Instant Video licensing agreements in 2012 with Turner Broadcasting, Warner Bros. Domestic Television Distribution and A+E Networks for television series including “Falling Skies,” “The Closer,” “Pawn Stars,” “Storage Wars” and “Dance Moms,” expanding its catalog of title offerings for Prime Instant Video subscription video-on-demand service to more than 36,000 movies and television episodes.

When asked specifics on original programming via Amazon Studios and expanded license deals for Prime Instant, Szkutak said Amazon would continue to up content selections for both the SVOD and transactional VOD platforms in a variety of ways — which, of course, he wouldn’t elaborate on.

“I think we have a very interesting [content] selection right now,” he said. “You should expect that we will be spending more on content on Prime over time.”

The Seattle-based e-commerce behemoth reported fourth-quarter (ended Dec. 31) media sales of more than $2.9 billion, which was up 13% from sales of $2.56 billion during the previous year period.

Media sales include physical and digital movies and TV shows, books, e-books, music and video games. Amazon’s digital media selection has grown to more than 23 million movies, TV shows, songs, magazines, books, audiobooks, apps and games in 2012, an increase from 19 million at year-end 2011.

“We’re now seeing the transition we’ve been expecting,” Jeff Bezos, founder and CEO of Amazon, said in a statement. “After five years, e-books is a multibillion-dollar category for us and growing fast — up approximately 70% last year. In contrast, our physical book sales experienced the lowest December growth rate in our 17 years as a book seller, up just 5%.”

For the quarter, Amazon reported net income of $97 million, down 45% from net income of $177 million during the previous-year period. Revenue increased 22% to $21.27 billion from $17.43 million last year. For the year, Amazon posted a loss of $39 million compared with net income of $631 million in 2011. Revenue topped $61 billion, up 27% from revenue of $48 billion in 2011.

Amazon shares were up nearly 10% in after-market trading at $285 per share, after closing down nearly 6% at $260 per share.

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