Amazon takes global licensing tack as it doubles content spending, triples number of originals

Amazon CEO Jeff Bezos (Source: Amazon)

Amazon is taking a page out of the Netflix playbook and touting the global availability of its original series and movies. The retail giant is also pouring more money into its content program overall, saying it will double spending in the second half of the year compared to the second half of 2015.

“That Originals content for TV and movies, that content can be used globally,” said Brian Olsavsky, senior vice president and CFO, in the company’s earnings call on Thursday, adding that investors should “stay tuned” for an announcement about launching Prime Instant Video in India, where it just announced the Prime retail program. The video service will include both local content and Amazon Originals, Olsavsky said.

The increase in spending for Amazon Prime Video could be more than $2 billion earmarked for both licensed and original content for the rest of 2016, though it isn’t known exactly how much Amazon currently spends due to its caginess around details about the subscription service. The last concrete amount revealed by the retailer was in 2014, when Amazon said it spent $1.3 billion for licensed and original content for the year. A January note by Wedbush estimated the service’s content spend for 2015 was $3 billion, a Business Insider article reported, and may be growing by $1 billion per year; a recent Ampere Analysis note pegged 2015 spend at $2 billion.

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The company also saw banner sales on its second annual Prime Day on July 12, noting that Amazon saw record sales of its streaming devices, including its Fire TV and Kindle Fire tablets, as well as Echo and its e-readers. “Prime Day had enormous impact on the device business and devices were well featured and also well adopted by customers,” said Olsavsky.

Amazon saw its North American revenue grow 28 percent in the second quarter to $17.7 billion, while international revenue climbed 30 percent to $9.8 billion. The company saw diluted earnings per share of 19 cents on net income of $92 million.

For the third quarter, the provider is forecasting net sales between $31 billion and $33.5 billion, a growth rate between 22 and 32 percent; and operating income between $50 million and $650 million.

For more:
- see this Seeking Alpha transcript
- see the earnings release

Related articles:
Amazon to enable video downloads to Android phones with SD cards
Amazon and PBS deal for kids programming helps boost investor confidence, share price
Amazon's $2B estimated content spend easily subsidized by Prime subscribers, analyst says

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