An exclusive Reuters report has revealed how well Amazon’s Prime Video service is performing against Netflix, Hulu, and others. It’s a rare peek at a major player in an important digital market in which such data is typically kept secret.
Here’s what we learned, plus a few additional data points for context.
An audience of tens of millions. While Amazon has never released figures detailing the size of its audience, internal documents shows that about 26 million people regularly use its Prime Video service overall.
Digital video is paying off for Amazon. While many have questioned the escalating cost of the original content funded by firms like Amazon, Netflix, and Hulu, it’s paying off for the online retailer. Over 5 million new Prime customers came to the firm as a result of its video service by early 2017.
Amazon Originals are a big driver. Of the 26 million people who watch Prime Video content, about one-quarter of them are there for the company’s Prime Originals content. That’s the content that Amazon funds directly and provides exclusively.
Amazon Originals are expensive, too. Amazon spends about $5 billion per year on original and exclusively licensed content, Reuter says. By comparison, Netflix paid $6 billion on such content in 2017, and it could spend as much as $8 billion this year. Hulu spends $2.5 billion, while Apple’s budget is just $1 billion. (Look at me doing research.)
Deep dive: “Man in the High Castle”. The show “Man in the High Castle” cost $72 million to produce and market. It attracted over 1 million new Prime subscribers, and “Amazon calculated that the show drew new Prime members at an average cost of $63 per subscriber,” Reuters notes. But it had a total audience of 8 million viewers in the U.S. alone.
Deep dive: “The Grand Tour”. By comparison, the Amazon Originals show “The Grand Tour” only cost Amazon $49 per subscriber. It drew an audience of 1.5 million first streams.
Deep dive: “Transparent.” The Amazon Originals show “Transparent” is an industry darling, having won numerous awards and thus some free publicity for the service. But it lags in viewers: At its height, the show was only half as big as “Man in the High Castle” in the U.S. and it fell to 1.3 million viewers for its third season.
Deep dive: “Good Girls Revolt”. This other critically-acclaimed show hasn’t panned out for Amazon at all: It had 1.6 million viewers in the U.S. but cost $81 million to make and was only streamed 52,000 times by viewers who joined Prime specifically for new video content. “The program’s cost per new customer was about $1560, according to the documents,” Reuters notes. “Amazon canceled it after one season.”
Digital perks drive Prime adoption. While the Reuters report doesn’t provide specifics, it does say that the internal documents it viewed prove that Jeff Bezos’s stated goal for these digital services is working: It is driving more and more customers to adopt a Prime Membership, each of which is a nice annual subscription fee for Amazon to collect.
How many Prime subscribers? Amazon never divulges how many people subscribe to Prime, and the internal documents that Reuters saw do not provide a number, either. Instead, Reuters notes that “analysts” estimate that there are 75 million Prime subscribers worldwide, and that over half are outside the U.S.
How many Prime subscribers actually use Prime Video? Of those 75 million Prime members, about 26 million actually use Prime Video in the U.S. only, about half the number that uses Netflix in the U.S. Worldwide, Netflix has over 120 million subscribers, while Hulu has over 17 million.
“The Lord of the Rings” is coming. Amazon paid $250 million for the rights to a serial prequel to “The Lord of the Rings.” (I thought that’s what “The Hobbit” was. Anyway.) And it will spend at least another $500 million in production and marketing for its first two seasons, triple the cost of “Man in the High Castle.” So it would need to draw three times as many viewers to pay off. Something tells me it will work out just fine: “Man in the High Castle” isn’t exactly a high profile book or show, but Tolkien’s work exists on a much higher plane.