Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Amazon Gets Serious About Original Content

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Programming piped through the Internet isn't new,'s (NASDAQ: AMZN  ) been at it for some time, offering customers its Prime service. The primary player in the world of online entertainment, Netflix (NASDAQ: NFLX  )  has investors gaga over its streaming content service, irrespective of its profit potential.

What makes the recent news from different is the announcement it intends to get into the production end of things, developing its own package of original content. Unlike its Prime service, or Netflix's streaming video purchased off the shelf, Amazon is following Google with its Hollywood-level content development on YouTube and the original programming Yahoo! offers into the untested waters of Internet program creation.

The content
According to a report issued by IHS, Amazon will produce and offer to its customers six new, in-house produced comedies, expected to be available in December. The market for original Internet content is up for grabs, assuming a relevant market actually materializes. The programming effort from Netflix, called House of Cards, is slated for introduction next month and should give Amazon at least an inkling of what to expect.

Why would Amazon take on the responsibitlies associated with content creation? After all, that's the bailiwick of those Hollywood types, right? There are a few reasons that, at least in theory, will make Amazon's efforts, as well as those of Netflix, YouTube's production videos, and Yahoo!'s clips, worthwhile.

With as many players as there already are in the streaming video market, and more on the way, original programming is a means for Amazon to differentiate itself from the masses. Also, reliance on content from third parties -- in other words, those Hollywood types -- is already an expensive proposition. Amazon's content deal with Epix consisted of both an up-front payment -- Netflix had been paying $200 million to Epix annually, though that included exclusivity -- and possibly more based on Prime subscriber growth. Clearly, the cost of online content can be significant, and slowly building a warehouse of programming developed in-house may help Amazon, and others, manage those expenses.

The difference with Amazon
Like Netflix, Amazon's current Prime service customers will have access to new programming as it comes online as part of their existing package. What makes Amazon's content efforts especially intriguing, unlike the kings of online content -- Google's YouTube, Netflix, or the multitude of original offerings from Yahoo! -- is the potential for sales and licensing revenue.

First and foremost, Amazon is the king of online retail. Its AWS cloud solutions, Kindles, and Prime, are all above and beyond what Amazon does best: Sell a lot of stuff. With that said, imagine if one or more of its six new, original Internet programs hit pay dirt? Packaging and selling DVDs is what Amazon does -- and does it better than most.

Amazon's foray into content production has the potential to boost subscriber growth for its Prime service, generate retail sales of DVDs, and further differentiate itself from Netflix, Google's YouTube, and Yahoo!.

Everyone knows Amazon is the big, bad wolf in the retail world right now, but at its sky-high valuation, many investors are worried its share price is in jeopardy. We'll tell you what's driving the company's growth, and fill you in on reasons to buy and reasons to sell Amazon in our new premium report. Our report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2212098, ~/Articles/ArticleHandler.aspx, 8/29/2016 1:48:11 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,395.40 -53.01 -0.29%
S&P 500 2,169.04 -3.43 -0.16%
NASD 5,218.92 6.71 0.13%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/26/2016 4:00 PM
AMZN $769.00 Up +9.78 +1.29% CAPS Rating: ****
GOOGL $793.22 Up +1.92 +0.24%
Alphabet (A shares… CAPS Rating: *****
IHS.DL $0.00 Down +0.00 +0.00%
IHS CAPS Rating: *****
NFLX $97.58 Up +0.26 +0.27%
Netflix CAPS Rating: ***
YHOO $42.27 Up +0.24 +0.57%
Yahoo CAPS Rating: **