Amazon revealed for the first time that it spent $1.7bn on video and music content. With this investment, it aims to capitalise on production costs of all original content to amortise expenses over time.
In a new filing with the U.S. Securities and Exchange Commission (SEC), Amazon has unveiled its plans to spend $7bn on video and music content this year. In Q1, Amazon spent $1.7 billion on video and music content.
Total video and music expense were $1.5bn and $1.7bn in Q1 2018 and Q1 2019. Total video and music expense include licensing and production costs associated with content offered within Amazon Prime memberships, and costs associated with digital subscriptions and sold or rented content, the filing read.
Amazon rivals Netflix, Hulu and a host of other streaming offerings on the video side. On the music front, it competes with Apple, Spotify and others.
Unlike its competitors, Amazon wraps its offerings into a broader annual subscription plan, taking advantage of its dominance in e-commerce and consumer demand for fast shipping. Prime members typically pay $119 a year.
The $7bn spend for this year exceeds prior estimates by some analysts and could raise questions on the effectiveness of the investments, as Amazon has previously told shareholders that it expects to ramp up spending in other areas like physical stores and grocery delivery.