Amazon CEO: Prime Video can be profitable in its own right

Ahead of the launch of advertising on Amazon Prime Video, with Amazon CEO Andy Jassy expressing confidence that the streamer will ultimately become profitable in its own right, advertising services led Amazon’s revenue growth in the fourth quarter, with ad sales up 27% year-on-year to US$14.65 billion.

Andy Jassy (Source: Amazon)

That compares with overall sales of US$170 billion for the quarter, up from US$149 billion for the same period in 2022.

The retailing and tech giant posted net income of US$10.6 billion for the quarter. The figures beat expectations.

Jassy said on the Amazon earnings call that Amazon was increasingly convinced about Prime Video’s prospects for standalone profitability, with advertising making a significant contribution.

“We have increasing conviction that Prime Video can be a large and profitable business on its own, and we’ll continue to invest in compelling exclusive content for Prime members like Thursday Night Football, Lord of the Rings, Reacher, Mr. & Mr. Smith, Citadel and more. And with the ads in Prime Video, we’ll be able to continue investing meaningfully in content over time,” said Jassy.

The launch of advertising on Prime Video was cited by Jassy as enabling the company to continue investing in content for the service.

Advertising across streaming businesses

Answering an analyst question, CFO Brian Olsavsky said that “advertisers are excited to access our Prime customer base” and added tha the company was looking to extend its advertising proposition across its streaming businesses.

“We are looking for ways to increase advertising in our streaming properties, including Fire TV and Prime Video, but also things like Freevee and Twitch. It’s an important part of the total business model, and we expect it will allow us to have a healthy business to continue to invest in content,” said Olsavsky.

He added that Amazon did not intend to introduce heavy ad loads compared with network TV.

Regarding Prime Video content’s appeal to advertisers, Amazon highlighted its increased total viewership for the second season of Thursday Night Football (TNF) by 24% year over year, and the fact that it achieved double-digit growth (14%) for the second consecutive season in the 18-34-year-old demographic, citing Nielsen. The November 30 Seahawks-Cowboys game attracted 15.3 million viewers, becoming Prime Video’s most watched TNF game ever, according to Nielsen.

It also highlighted the reach of new series and movies, including he second season of Reacher, which was the No. 1 title on Nielsen’s Top 10 Originals Streaming chart for the week it debuted and had the highest number of minutes viewed for any Prime Video title during a single week in 2023, and thriller Saltburn, which had the highest week-over-week audience growth of any film on Prime Video in 2023.

In a slightly retro touch that showed satellite may still have a future for the delivery of TV, Jassy meanwhile also talked about Amazon’s Project HyPer LEO satellites, two prototypes of which were launched last year, testing of which included streaming of “a Prime Video movie in Ultra HD 4K” along with other applications.