Amazon Prime Video Plans Hollywood Expansion, Reports Reuters

By Dawn Chmielewski and Greg Bensinger

When Mike Hopkins was approached about leading Prime Video, his perception of the streaming service was common in Hollywood—he viewed it primarily as a perk for subscribers of the online retailer’s two-day delivery option. However, Amazon’s founder, Jeff Bezos, had grander aspirations for the platform, envisioning it as a cornerstone of a media empire.

"After meeting with Jeff, it became clear that he saw this as an opportunity to build a media company," said Hopkins, a seasoned entertainment executive with experience at Fox Networks, Sony Pictures, and Hulu, who has been instrumental in shaping Prime Video’s evolution over the past four years.

Under his leadership, Prime Video is evolving to resemble a conventional media company, boasting its own film studio and theatrical distribution division, an increasing array of original movies and series featuring top-tier talent, a growing lineup of professional sports, and a focus on advertising.

Amazon’s CEO Andy Jassy recently conveyed optimism to investors about Prime Video’s trajectory. The platform’s rising profile and inclusion of live sports make it poised to capture a larger slice of the projected $28.75 billion digital advertising market this year, as advertisers shift budgets away from traditional TV. Morgan Stanley estimates that ad revenue from Prime Video could reach $3.3 billion this year, potentially more than doubling to $7.1 billion by 2025.

Despite this growth, Prime Video still trails industry titans like YouTube and Netflix in terms of streaming viewership share in the U.S., according to Nielsen data from June. However, it has seen some of its original shows break into Nielsen’s Top 10 most-streamed series for 2023, even as Netflix remains the leader.

Amazon’s ambition to establish a comprehensive entertainment platform that caters to diverse tastes is becoming clearer, according to insights from industry agents, ad buyers, and executives. Prime Video secured a groundbreaking exclusive deal with the NBA, paving the way for year-round sports programming, which will eventually encompass NFL games, NASCAR, WNBA Finals, and Champions League soccer.

In a move that challenges traditional studios, Amazon plans to significantly increase its theatrical releases, ramping up from six this year to as many as 16 by 2027. This projection does not account for international films or the movies it typically acquires and distributes directly through Prime Video, which would position it similarly to Hollywood’s most prolific studios.

This year, Prime Video has upped its budget by $1.7 billion to $13.6 billion, reflecting a deeper investment in professional sports and content production, even as other studios tighten spending.

The platform’s talent roster now includes A-list Hollywood figures like Reese Witherspoon and Jake Gyllenhaal, as well as sports stars such as tennis legend Roger Federer. Furthermore, Amazon has engaged Netflix’s former film chief, Scott Stuber, to revive the iconic United Artists label at MGM Studios.

Prime Video’s focus is clear: it seeks premium content and high-profile celebrities to attract advertisers. As Jessica Brown, managing director of digital investment for GroupM, noted, the platform previously had the reach but lacked compelling content.

January marked a significant moment when Prime Video began displaying ads to its estimated 115 million U.S. viewers, positioning itself as the largest ad-supported subscription streaming service in the country. Advertising executives recognize the value of this reach, especially since Amazon’s retail insights can allow for immediate product sales during commercial breaks.

Despite a history of creative challenges, including expensive misfires like "Citadel," Prime Video has also produced major hits like "The Boys," which achieved top streaming rankings in over 165 countries during its recent season. Hopkins emphasizes the need for content with broad appeal, seeking narratives that engage a wide audience, akin to a popular novel.

"Prime Video aims to be the primary choice for a diverse audience," Hopkins stated, with strategies aimed at satisfying various demographics and interests.

The platform continues to take calculated risks, evidenced by its $150 million investment in adapting the video game "Fallout," which became one of its most-watched series. Recognizable characters and narratives are key, as viewers often seek specific shows rather than browsing aimlessly.

This evolution marks a stark contrast from Amazon’s initial foray into video streaming, which relied on crowdsourced content from customers. The shift accelerated significantly following Amazon’s $8.5 billion acquisition of MGM, home to franchises like James Bond, giving the platform a robust intellectual property foundation without the need for costly bidding wars.

Sports form another crucial component of Hopkins’ strategy, underlining the importance of building a versatile entertainment ecosystem.

In conclusion, the aim is to create an expansive platform that goes beyond a single subscription model. As Hopkins points out, the vision encompasses a broader scope of streaming content, establishing a pathway for Prime Video to thrive as a financially sustainable entity.