Global ecommerce giant Amazon has announced in its quarterly financial filings that it has spent $1.7 Bn on video and music content in the first quarter.
Amazon said in a SEC filing, that the total capitalized costs of video, which is primarily released content, and music in the first quarter was $4.2 Bn, against $3.8 Bn in Q4 2018.
It further explained that total video and music expense was $1.7 Bn in Q1 2019, against $1.5 Bn of Q1 2018. This includes licensing and production costs associated with content offered within Amazon Prime memberships, and costs associated with digital subscriptions and sold or rented content.
In the regulatory filings, Amazon also announced the net sales of $59.7 Bn in Q1 2019, against $51.0 Bn of Q1 2018.
Net sales include subscription services of $4.3 Bn of Q1 2019 Amazon received as annual and monthly fees associated with Amazon Prime memberships, as well as audiobook, digital video, e-book, digital music, and other non-AWS subscription services.
During the company’s earnings call, Dave Fildes, head of Investor Relations said, “I mean, we’re continuing to invest meaningfully in digital video. It’s an area we’re very excited about. Lots of very popular critically acclaimed shows have obviously come out, things like Homecoming, Jack Ryan, more recently Hanna or Guava Island and some great titles. So I think look for us to continue to invest there.”
The company also claimed that they have had more people sign up for Prime in 2018 than any other year before. Also, the prime program engagement including order shipping, hours watched on video, hours listened to music, all are said to be trending in the right direction.
Amazon has been competing heavily in the content segment with players such as Netflix and Spotify. In India, specifically, the company also has other challengers such as Gaana, JioSaavn, Hotstar among others.
Poised to be a market worth $5 Bn by 2023, the Indian OTT segment is embroiled in an ongoing debate around the regulation of the OTT segment with discussions between TRAI, internet lobbies and associations such as the Internet and Mobile Association of India (IAMAI), the Broadband India Forum, and the Asia Internet Coalition.
According to a Billboard report Amazon has entered into discussions with record companies to launch a free, ad-supported music service, which could be launched soon. It’s not yet clear how the free service will coexist with Amazon Prime Music, the company’s paid music streaming offering.
On the music front, a KPMG report from 2015 said India’s recorded music business is set to nearly double to INR 18.9 Bn ($300 Mn) by the end of this year.