Amazon’s spending on video and music content climbed 13.8% year over year to $18.9 billion in 2023.
The figure, revealed in a 10-K filing on Friday, includes licensing and production costs associated with content offered within Amazon Prime memberships, as well as costs associated with digital subscriptions and sold or rented content.
In 2022, the tech giant spent $16.6 billion on video and music content, which included approximately $7 billion invested across Amazon Originals, live sports and licensed third-party video content included with Prime. Amazon did not break out the spend figure for originals, live sports and licensed third-party video content in its filing for 2023.
During the fourth quarter of 2023, Amazon had a higher spend on digital content, “especially around live sports, English Premier League, and Champions League in Germany and Italy, for example,” chief financial officer Brian Olsavsky told analysts on Thursday.
“But we like those benefits in those investments, different proven vehicle for customer acquisition, as I said, and it gets people shopping at our sites, and engaging with benefits is always positive for the relationship with Amazon,” he added.
The company’s total capitalized costs of video and music as of Dec. 31 was $17.4 billion, compared to $16.7 billion in the prior year period. The weighted average remaining life of Amazon’s capitalized video content is 3.5 years, according to the 10-K.
“We review usage and viewing patterns impacting the amortization of capitalized video content on an ongoing basis and reflect any changes prospectively,” the filing stated.
Overall, Amazon generated $31.76 billion in subscriptions revenue for 2023, which included annual and monthly fees associated with Amazon Prime memberships, as well as digital video, audiobook, digital music, e-book, and other non-AWS subscription services.
“We have increasing conviction that Prime Video can be a large and profitable business on its own and will continue to invest in compelling exclusive content for Prime members like ‘Thursday Night Football,’ ‘Lord of the Rings,’ ‘Reacher,’ ‘Mr. and Mrs. Smith,’ ‘Citadel’ and more,” Amazon CEO Andy Jassy told analysts on Thursday. “And with the addition of ads on Prime Video, we’ll be able to continue investing meaningfully in content over time.”
Prime Video’s ad tier officially launched Monday and will be the default for all subscribers. The streamer will offer a new ad-free option for an additional $2.99 per month for U.S. members. Currently, Amazon Prime, which includes Prime Video, costs $14.99 per month or $139 a year. A membership that only includes Prime Video and none of the company’s shipping benefits costs $8.99 a month.
Olsavsky reiterated during Thursday’s call that Prime Video would aim to have fewer ads than linear TV and other streaming TV providers. The ad tier’s initial rollout includes the U.S., U.K., Germany and Canada, followed by France, Italy, Spain, Mexico and Australia later this year.
The latest disclosure on Amazon’s content spend comes after it laid off hundreds of staff members in its Prime Video and Amazon MGM Studios divisions in January. The layoffs, which the company said impacted a small percentage of the division’s overall workforce, are part of a plan to consolidate Amazon Studios and MGM’s theatrical distribution team. MGM’s Scripted Television team and the MGM+ Productions team will be combining to form a unified creative group.
Amazon shares surged 6.9% in pre-market trading on Friday following the company’s fourth quarter earnings beat, which included a net sales increase of 14% year over year to $170 billion and net income that climbed to $10.6 billion, or $1 per diluted share, compared to $278 million, or 3 cents per share, a year earlier.
Analysts surveyed by Zacks Investment Research were expecting net sales of $166.2 billion and earnings of 81 cents per share.
