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People finally pay attention to Amazon Prime Video

People finally pay attention to Amazon Prime Video

Amazon (NASDAQ: AMZN) He recently gave investors an idea of ​​how many Prime members are streaming movies and series on Prime Video. Tip: This is just too much.

CEO Jeff Bezos said 175 million Prime members streamed videos in 2020. The total number of Prime members exceeded 200 million earlier this year.

Video Prime’s level of approval and engagement among members bodes well for Prime’s growth and Amazon’s continued dominance of online retailing.

Image source: Getty Images.

Increase the audience of the main video

Amazon says total Prime Video playback hours increased by 70% year-over-year in 2020. Perhaps most impressive, however, has been seeing Prime Video sharing progress in recent years.

Internal documents leaked to Reuters in early 2018 found that only 26 million Americans used the video streaming service included in their Prime subscription in 2017. At the time, Amazon was just starting to offer Prime Video globally. Previously, Prime Video was only showing in the US, UK, Japan, Germany and Austria.

Additionally, it is estimated that only about half of Prime members used Prime Video in 2019. Today, that number approaches seven in eight.

The coronavirus pandemic has been a major catalyst for engaging with Prime Video. Consumer experience Netflix Maybe fatigue activated your Prime Video account for the first time just to see what else is available, without paying for another streaming service. And they were probably completely satisfied with what they found.

Amazon has significantly increased its investment in content in the past year. The company’s total spending on music and video content increased to $ 11 billion in 2020, compared to $ 7.8 billion in 2019. Amazon planned to increase spending on its original movies and series, as well as licensed content. He also used the opportunities of closing cinemas to buy movie rights from other studios. The company’s spending on music and video content grew another 25% year-on-year in the first quarter of 2021, to $ 3 billion.

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So, people started paying attention to Prime exactly when Amazon was increasing its investment in content. This bodes well for our continued commitment to service after the pandemic, even if we have more entertainment options.

Keep members involved and bring in new members

The adoption of Prime has accelerated in 2020, as store closures have prompted people to order more items online. Amazon is already a dominant force in online shopping and its Prime membership program ensures it stays at the top of the list.

Greatest Engagement with Prime Video is a great subscriber retention tool. “We see Video Prime as an element of Prime’s broader membership and make sure it leads adoption and retention as is,” said Dave Fields, head of investor relations at Amazon, during the company’s first-quarter earnings conference call. “Members watching the videos have higher free trial conversion rates, higher renewal rates, and higher public participation,” he added.

So, while the pandemic has led to more consumers signing up to Prime for referral benefits, Prime Video will keep them enrolled for years to come. This should translate into an ongoing force of revenue from subscription and retail services.

But Fields also indicated that Prime Video could be a tool to attract subscribers in countries where Amazon does not dominate e-commerce. He specifically referred to Brazil, where the company launched Video Prime in late 2016 and additional Prime benefits in the fall of 2019. Video is also a key element of its strategy in India.

Greater participation gives Amazon more license to invest in content, creating a virtuous cycle.

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There is still room for improvement

Even with Amazon’s strong engagement with the prime minister last year, the government is not content with its laurels. In particular, he agreed to spend around $ 1 billion annually on the rights to Friday Night Football. This is exclusive content that can get more subscribers to install and explore the Prime Video app on the TVs or smartphones connected to them.

While nearly all Amazon members watch Prime Video, its expanding content library can make it the largest customer acquisition tool for Prime than ever before. As long as Amazon gets good returns from Prime’s growth, retention, and sharing, which investors can track through its subscription services and retail revenue, it can continue to invest in content and improve its video service.

This article represents the opinion of the author, who may not agree with the “official” recommendation position of a Motley Fool premium consulting service. We are diverse! Asking about an investment thesis, even if it is ours, helps us all to think critically about investing and make decisions that help us be smarter, happier and richer.