Roger Fingas
Perhaps explaining Apple's rush to air original TV shows, internal Amazon documents claim that the retailer's own ventures into TV managed to pull in some 5 million Prime subscribers between late 2014 and early 2017.
For all Prime Video programming, original or not, Amazon managed to reach 26 million total viewers in the same timeframe, Reuters reported on Thursday. The company has never officially disclosed that number.
Amazon is said to evaluate its shows on their budget, viewership, and the number of people they draw into Prime, normally priced at $99 per year. For the third metric, a Reuters source said that Amazon uses the concept of the "first stream" — the first show a person watches after joining Prime.
A show's expenses are divided by the number of first streams, yielding an estimate of how much it cost to attract each subscriber. The lower that value, the better.
"The Man in the High Castle," for example, had 8 million U.S. viewers in early 2017. The show cost $72 million to make and sell, but may have drawn in some 1.15 million Prime subscribers worldwide. That translates to $63 per subscriber — easily worth it given that Prime customers are liable to do more of their shopping through Amazon.
A failure by the company's standards was "Good Girls Revolt." Despite being well-reviewed, it garnered just 1.6 million viewers at a cost of $81 million, with only 52,000 first streams. Using Amazon's math, the cost per new Prime customer was a whopping $1,560.
It's still unclear how Apple intends to make money off its upcoming TV slate, which will include a number of star-studded, high-budget shows. It could wall them off behind Apple Music, but has also been rumored as making them free to anyone with compatible Apple hardware.
A particular challenge for Apple is its decision to avoid any risque material. Amazon is working on a prequel series to "The Lord of the Rings," likely to have plenty of violence and attract the same sort of audience that made HBO's "Game of Thrones" one of the most popular shows anywhere. Reuters sources indicated that Amazon is so confident that it could end up spending as much as $500 million or more on two seasons — including the $250 million it paid for the rights to the franchise.
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9 Comments
There are quite a few good Amazon funded series and original movies, but there is a lot of rubbish on Prime Video also. Some is so bad it should never have been considered.
I'm pretty sure Amazon loses money on me as a customer the way I take advantage of free shipping once my wife forgot to cancel the trial Prime membership. To the credit of their logistical prowess, they do a good job trying to consolidate my tiny separate orders into one shipment, but there are plenty of times when I'm sure that the price I paid didn't even cover shipping. But Wall Street loves them, so they are doing something right.
Prime loses money. Funding original programming loses money. All Amazon cares about is the stock price, and as long as they keep entering new markets and announcing new products their stock maintains it's magical growth. None of it really makes much sense.
I wouldn't pay for Amazon Prime Video as a service. I couldn't tell you the last must see program I watched there, much less looked forward to seeing. However I do use my Prime account for free shipping all the time, and have easily gotten the value out of it, so adding video is the perk which I sometimes avail myself of... I suppose it could work in reverse, but it doesn't seem quite as motivating as they require two different apps. If someone is not using Amazon to buy products in the first place, I'm not sure why watching a TV show on Amazon is going to motivate someone to change their shopping habits. I guess someone might say, "hey we've got free shipping with our video subscription, let's see if we need anything from Amazon"?