Amazon CFO: Prime Instant Video Driving E-commerce Sales23 Apr, 2015 By: Erik Gruenwedel
Amazon spent $1.3 billion in 2014 licensing original and third party content for its Prime Instant Video streaming service. Funding, the online behemoth said helps drives e-commerce across the platform.
In other words, original series such as L.A. detective drama “Bosch,” dramatic comedy “Mozart in the Jungle,” kids series Gortimer Gibbon’s Life on Normal Street,” and double Golden Globe winner “Transparent,” are primarily marketing tools intended to entice Prime subscribers into buying stuff, CFO Tom Szkutak told analysts on the April 23 fiscal call.
He said a typical free trial Prime Instant Video user converts at higher rate into a paying member than someone who don’t watch video. The CFO said the purchasing patterns among streamers is higher as well as more diverse — covering both physical and digital products.
“The video content we are [buying] is helping us. These customers will buy consumables, clothing, shoes and electronics from us,” Szkutak said.
The CFO said rollout of Prime Now bicycle delivery in select markets is another investment designed to drive e-commerce.
North American first-quarter (ended March 31) sales increased 24% to $13.4 billion, from $10.8 billion during the prior-year period. Media sales, which include packaged and digital media, increased 5% to $2.9 billion.
“Content costs associated with Prime are inextricably linked to our consumer business. We’re happy to do it,” Szkutak said.