Amazon to ‘significantly increase’ originals spend

Brian Olsavsky

Brian Olsavsky

Amazon has announced plans to “significantly increase” spend on Amazon Originals content after reporting surging Q1 sales and profits.

Speaking on the company’s first quarter earnings call, chief financial officer Brian Olsavsky said that Amazon Prime had experienced “very strong growth” in recent years and that its approach to making original premium content is proving a success.

“We’re going to significantly increase our spend in that area. Some of that is in Q2, you’ll see that more in the next few quarters. But we think that’s working and look forward to bringing a lot of new content to our Prime subscriber base, both through our normal Prime subscription and also the monthly plan,” said Olsavasky.

The CFO said that Amazon Prime subscriptions were up 51% year-over-year in 2015 – 47% in the US and a higher rate than that internationally – and attributed this growth to “a culmination of a lot of separate investments”, including Amazon Originals.

Devices also played a part. In Amazon’s Q1 earnings announcement, CEO Jeff Bezos said that earlier this week Amazon’s Fire TV Stick “became the first product ever — from any manufacturer — to pass 100,000 customer reviews, including over 62,000 five-star reviews.”

For the quarter, Amazon’s net sales grew 28% year-on-year to US$29.1 billion. Operating income was US$1.1 billion in the first quarter, compared with US$255 million in first quarter 2015. Net income was US$513 million, compared with net loss of US$57 million in the year-ago quarter.

Earlier this month Amazon revealed that it is going head-to-head with Netflix by launching Prime Video as a standalone, pay-monthly service for the first time in the US.

Amazon now offers Prime Video as a US$8.99 per month subscription video-on-demand offering. The service also remains included in its broader US$99 per-year Amazon Prime package, which offers additional features such as ebook access, music streaming, free two-day shipping and free same-day delivery in eligible areas.

In the UK, a monthly subscription option for Prime Video, priced at £5.99 per-month, has been available since Amazon launched Prime Video there in 2014, as this continued over from the LoveFilm Instant package.

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