Amazon Prime Video Plans Hollywood Expansion, According to Reuters

By Dawn Chmielewski and Greg Bensinger

When Mike Hopkins was approached about leading Prime Video, his initial impression mirrored a common belief in Hollywood – it was merely a bonus for subscribers of Amazon’s two-day delivery service. However, founder Jeff Bezos envisioned far greater aspirations for the platform, which offers a mix of movies, television shows, and original programming.

“After my meeting with Jeff, it became evident that he viewed this as an opportunity to build a significant media company,” said Hopkins, a seasoned figure in the entertainment industry with experience at various major firms. In the past four years, he has steered Prime Video toward becoming a notable player in Hollywood.

Under Hopkins’ leadership, Prime Video is evolving into a conventional media company, featuring its own film studio and theatrical distribution capabilities, a growing library of original movies and series starring prominent actors, and an expanding range of professional sports content, alongside advertising initiatives.

“We are pleased with the progress of Prime Video,” said Amazon CEO Andy Jassy during a recent update to investors.

With its increasing array of star power and live sports content, Prime Video is well-positioned to secure a larger portion of the projected $28.75 billion in digital advertising revenue earmarked for streaming this year, as brands cut back on traditional television marketing. Projections from Morgan Stanley suggest that advertising on Prime Video could yield $3.3 billion in sales this year and potentially double to $7.1 billion within two years.

Nevertheless, Prime Video still trails industry frontrunners like YouTube and Netflix in terms of U.S. streaming viewership share, as indicated by Nielsen for June. Although more of its shows have recently entered Nielsen’s Top 10 for most streamed original series in 2023, Netflix remains the dominant force.

Amazon’s strategy aims to create a comprehensive entertainment hub catering to varied interests, as noted by agents, advertising buyers, and executives in the entertainment industry. Prime Video became the first streaming service to secure an exclusive agreement with the NBA, leading to year-round sports programming that will expand to include NFL games, NASCAR racing, WNBA Finals, and Champions League soccer by 2025.

Additionally, Amazon intends to significantly increase its theatrical releases from six this year to as many as 16 by 2027, a significant move that could rival the output of leading Hollywood studios. This count excludes films aimed at international audiences, as well as other studio acquisitions.

Prime Video’s budget for content rose by $1.7 billion to $13.6 billion this year, reflecting its commitment to enhancing its professional sports offerings and ramping up content production while other studios reduce their expenditures.

Notable talent currently associated with Prime Video includes A-list stars such as Reese Witherspoon, Jake Gyllenhaal, and Octavia Spencer, alongside sports legends like Roger Federer. Tesla has also recruited Scott Stuber, former head of Netflix films, to revitalize the historic United Artists label at Amazon MGM Studios.

According to Jessica Brown, managing director of digital investment for media buyer GroupM, Prime Video recognizes the necessity of premium content and celebrity involvement to attract advertisers. “Previously, they had the scale, but were lacking a compelling content narrative,” she explained. “Cultural relevance is essential.”

The advertising community took note when Prime Video introduced ads to its approximately 115 million U.S. viewers this January, making it the largest ad-supported subscription streaming service domestically. Advertising experts indicate that this reach, combined with insights from Amazon’s retail platform, presents a unique opportunity; Amazon can facilitate immediate purchases for consumers during commercial breaks.

“This is resonating across the marketplace,” stated Kevin Krim, CEO of a marketing analytics firm, noting that the influx of new advertising space may be leading to lower ad rates for competitors.

While Amazon has faced creative challenges at times, achieving notable successes like “The Boys” – which garnered significant attention globally – it has also experienced high-profile misfires like “Citadel.” Aiming for broader appeal, Hopkins is focused on creating projects that resonate across various demographics, likening the ideal Prime Video project to a widely appealing airport novel.

“We aspire to be the top choice for many viewers’ shows or films,” noted Hopkins, who leads Prime Video and Amazon MGM Studios.

Moving forward, Amazon is targeting four primary audience segments with content tailored to their interests, investing appropriately based on the size of the potential viewer base. It seeks content that appeals to young adults, action-oriented males, and female audiences with stories featuring relevant themes.

For instance, the platform is keen on youthful stories like "The Summer I Turned Pretty" and high-octane action series akin to "Tom Clancy’s Jack Ryan." It also aims to provide consistent offerings, avoiding dry spells between hits.

On the flip side, Amazon is willing to invest considerably in high-profile adaptations, as seen with its $150 million expenditure on the “Fallout” series, which emerged as one of its most popular shows.

Accessible and recognizable characters are vital for attracting an audience, as users often seek specific titles on Prime Video. This contrasts with user behavior on platforms like Netflix, where browsing is commonplace.

Whereas Amazon initially sought content through customer crowdsourcing, its acquisition of MGM for $8.5 billion marked a transformative shift, providing it access to a vast array of intellectual property without having to engage in bidding wars.

Instead of getting embroiled in a fierce competition, Hopkins emphasized the advantages of owning a studio rich in intellectual property, thus allowing Amazon to cultivate its own projects.

Sports represent another foundational aspect of Hopkins’s long-term media strategy.

His overarching vision is to develop a content-rich platform that extends beyond just streaming subscription services, reflecting Amazon’s ambition to create a multifaceted media offering that stands to be a financially viable and significant business in its own right.