Amazon spent a cool $11 billion on TV series, movies and music for its Prime services last year, an increase of 41% from $7.8 billion in 2019, the ecommerce giant disclosed in its annual report Thursday.
The total content spending includes licensing and production costs associated with video and music offered to Amazon’s Prime members, as well as costs associated with digital subscriptions and content that the company sells or rents, the company said.
Amazon also reported that the total capitalized cost of music and video content (which is primarily released) for the year ended Dec. 31, 2020, was $6.8 billion, up 17% from the year prior. A capitalized cost is an expense added to the cost basis of a fixed asset on a company’s balance sheet. Amazon noted that its content licensing agreements include both fixed and variable payment schedules, and it amortizes those costs either on an accelerated basis (based on estimated usage) or on a straight-line basis.
The megabucks that the company is plowing into Prime Video and Amazon Music underscores Amazon’s goal of becoming the global digital entertainment leader. Last month, Amazon inked a 10-year deal with the NFL nabbing exclusive rights to “Thursday Night Football” starting in 2023; the pact works out to $1.32billion per year, Sportico reported.
While Amazon didn’t provide a breakdown between video and music spending, the numbers show it’s upping the ante to compete with rivals including Netflix. On a cash basis, Netflix spent $11.8 billion on streaming video content in 2020, compared with $13.9 billion the year prior, as the coronavirus halted productions for the better part of the year. However, like Amazon, Netflix also has content payments due over several years, and those content obligations totaled $19.2 billion at the end of 2020.
Also Thursday, Amazon founder Jeff Bezos announced that the company has more than 200 million Prime members worldwide — up from 150 million in January 2020. Bezos, who has led the company since its inception in 1994, is set to relinquish the CEO role in the third quarter of 2021 while remaining executive chairman. Amazon Web Services CEO Andy Jassy has been picked to replace Bezos as Amazon’s chief executive.
The company doesn’t break out the number of Prime members by country or region, nor has it revealed specific numbers about Prime Video viewership. In the U.S., Amazon Prime costs $119 per year or $12.99 per month.
For the full year 2020, Amazon’s revenue increased 38% to a record $386.1 billion, with the COVID-19 pandemic driving up sales for the company. Net income nearly doubled to $21.3 billion compared with net income of $11.6 billion in 2019.
