Amazon.com is looking to make it big in the movie production business with a promise of producing up to 12 movies annually. The announcement should come as a surprise to investors who have been calling for the company to only focus on the core business as well as generating shareholder value instead of pursuing unproven avenues for growth.
Amazon Budget on Movies
The latest business push seeks to propel Amazon.com from solely being a content distribution entity to a production unit. The released films will be made available on the company’s Prime video service seen as another avenue for competing against Netflix, Inc. in the video streaming business. The giant online company is planning to focus on producing ‘indie’ movies that have a market cap budget of between $5 million and $25 million.
The movie business is poised to add additional expenses to a company that has been struggling with an uproar from investors who remain concerned about suppressed profit margins. Investors’ concerns could be justified by the fact that Amazon.com is entering an industry filled with an immense amount of uncertainty seen by giant films like Paramount and Warner Bros already having exited the space.
The move to content creation on the other hand highlights Amazon.com’s ambition to become a giant on the digital media space away.
Competition against Netflix
Amazon.com announcing that it is to start producing digital content, comes just days after the hiring of director, Woody Allen, who is to create a TV series for the company. Amazon will look to gain an advantage in the video streaming business against Netflix by attracting more subscribers to its Prime Video service, which comes bundled with a two-day delivery package for only $99 a year.
It remains to be seen whether the creation of content is the missing link that will lift Amazon from its current woes of suppressed margins, as well as a lack of profitability. The company is not new at shifting focus away from its core business. It has already faced disappointments on the smartphone scenery with Fire Phone that failed to live up to expectations.
If successful on the creation of original movies, Amazon.com could push to revitalize an industry that has been struggling with dwindling audiences in the recent past.