Making Amazon tick

Amazon’s original content strategy is a risk but could pay off in a big way, analysts and producers say.

Over the last year Amazon has bolstered its video content library through investment in both acquisitions as well as original programming. Ampere Analysis estimates that by the end of 2017, the e-retail giant will have spent a total between US$500 million and US$1 billion on original programming alone.

This falls in line with the company’s wider ambitions to dominate the video content space. This time last year, Amazon chief Brian T. Olsavsky vowed to triple Amazon’s originals compared to those it had created by the end of 2015.

Since January 2016, it has launched originals such as The Man in the High Castle, The Grand Tour, Mad Dogs, Sneaky Pete and Patriot. In addition, it has ordered comedies such as One Mississippi and Crisis in Six Scenes, and kids shows such as The Stinky & Dirty Show and Niko and the Sword of Light.

Upcoming on the platform are Homecoming, which features Julia Roberts’ first TV series starring role, superhero drama-comedy The Tick (pictured) and neo-Victorian drama Carnival Row.

The question remains, however, what the platform is getting back for its investment. Daniel Gadher, Ampere’s senior analyst, tells TBI that the revenue generated from Amazon’s video subscriptions is not yet at a level to sustain such high levels of investment in content. “However, Amazon can use its vast retail revenue to supplement its content investment strategy,” he says.

“Ultimately, developing a strong content library helps to add further value to the Amazon Prime subscription and drive consumers towards its retail platform.”

So, while Amazon may not be getting direct financial benefit from these investments, it certainly sees opportunity in connecting with the audiences it draws in. That differs to Netflix, which has invested even more heavily in originals only to drive subscriptions (though this may change with the acquisition of Millarworld and the launch of an L&M arm).

This was further reflected in Amazon’s Q3 financial results this year, where it announced that it would up content spend again.

The strategy also offers an explanation as to why Amazon has made certain content investments. Take the example of The Tick: its producers tell TBI that although they have had a very positive relationship with the SVOD platform from the get-go, and that the show’s already-established audience was key to it being a purchase-worthy title for the retail giant.

David Fury, an executive producer of The Tick, says: “Although we are grateful for how much Amazon has invested in us and for their generosity, it is as much a great partnership for them because it now has a product that has a built-in audience. A lot of people who love The Tick and have loved it for years will be hopefully following it on Amazon.

“A lot of people who just see the trailers, who hear about it and are attracted to the show we’re making, will come as well. So, it’s a great symbiotic benefit to why Amazon is the best possible platform to be in business with.”

Amazon has become accustomed to honing into superfan groups. Its most popular show of the year, The Grand Tour, features Jeremy Clarkson, Richard Hammond and James May, bringing in established Top Gear fans.

Its launch saw Netflix bumped from the top global demand charts for the first time in the three months to March, according to Parrot Analytics stats.

Homecoming, which had a pre-established audience as a podcast series, and Ripper Street, which was brought back by Amazon Prime Video for a new season after being axed by the BBC in 2014, are others examples of this. Amazon has also signed a first-look development deal with The Walking Dead creator Robert Kirkman and his Skybound Entertainment compatriot David Alpert, a major coup that came as Netflix poached Shonda Rhimes from ABC Studios.

The service has also zoned in on key markets. Since launching Amazon Prime in India in December 2016, it has ordered 18 original Indian titles, including Their, an original drama pilot starring Anil Kapoor from V Productions. The SVOD service says debut original Inside Edge is one of the most-watched titles on its localised service.

The strategy may be working. Over the past twelve months Amazon Prime Video subscribers have grown by close to 75% globally, according to Ampere. In addition, viewers specifically tuning into originals on the platform are growing. Statista shows that in the US those viewing originals have jumped from 16% to 31% from December 2015 to 2016.

The Tick’s creators – Ben Edlund (the original concept creator), Barry Josephson and Fury – tell TBI that Amazon’s approach differs to those that they had worked with before. The show was given more time for development and more care was taken into really defining the show and its aims, they say.

Referring to the team’s initial pitch meetings with Amazon, Josephson says: “Usually these meetings are brief, you go and pitch for 20 minutes you’re out! There might be a couple of questions and that’s it, but for us it was on for hours you know just talking it through.

Amazon’s head of half-hour and drama development Joe Lewis and Edlund would “go back and forth” on character, plot and other key story elements, Josephson adds.

This may help series return for multiple seasons and reduce development time in future. Edlund says: “A lot of times, things get bought and then put into pilot making process so quickly that they don’t really get a depth analysis about what they are and what they want to do.”

Previous live-action versions of The Tick suffered from that but Amazon has been different, he says: “We were given three years to work out the engineering around this.”