Amazon(NASDAQ:AMZN)validated its original programming efforts earlier this month, when its new series, Transparent, won best comedy at the Golden Globes.
The win is notable, as Amazon's show was up against several established favorites, including Netflix's Orange is the New Black and Time Warner's HBO series Girls. Yet, despite the critical acclaim, very few Prime subscribers actually watch the show.
Amazon viewers are less engaged
According to a new survey from Consumer Intelligence Research Partners, less than 40% of Amazon Prime subscribers have actually seen an episode of Transparent, and less than 10% have finished the entire series.
This stands in stark contrast to rival services: Nearly 80% of Netflix subscribers have watched at least one episode of Orange is the New Black, for example, and more than 80% of HBO Go subscribers have watched at least one episode of Game of Thrones. In fact, on a percentage basis, there are more HBO subscribers who have seen every episode of Game of Thrones than there are Amazon Prime members who have watched just a single episode of Transparent.
Of course, the comparison may not be completely fair -- Game of Thrones is going into its fifth season and has had several years to generate a loyal following. The same is partly true for Orange is the New Black, which debuts its third season this summer. Transparent, on the other hand, has only been available to Prime members since the end of September.
Admittedly, there is a certain selection bias at play -- given that Netflix and HBO only offer video, their subscribers are clearly motivated to watch original programming. Amazon Prime offers not only streaming video but free two-day shipping, access to the Kindle lending library, cloud storage, and free Prime Music, among other perks. Someone who subscribes to Prime for the two-day shipping may have no interest in the video content -- the same cannot be said for Netflix or HBO.
Is Amazon wasting investors' money?
The results of the survey are encouraging, in a sense, because they suggest that Amazon has much room to grow. Prime video content may be currently underappreciated, but if Amazon can do a better job popularizing its original series, the company can still meaningfully grow its Prime subscriber base in the years ahead. The recent Golden Globe win should only bolster those efforts.
However, the low viewership also suggests that Amazon's original programming efforts may be wasteful: The content is expensive to produce, and if members aren't watching, the money could be better spent elsewhere.
Amazon lost $437 million last quarter, more than analysts had expected. Contributing to that loss was $100 million it invested in original programming. Amazon management would argue that the money is well-spent, that establishing a library of quality video content will allow it to add Prime subscribers in the future and thereby grow a large base of loyal members.
Perhaps, but Amazon investors should hope for higher rates of engagement. Transparent may never become a widespread, cultural phenomenon like Game of Thrones, but a respectable fan base is needed. Critical acclaim is nice, but Amazon still has plenty of work to do to justify its investment in original programming.