Amazon plans to ‘significantly’ increase investment in video as it goes to war with Netflix

Amazon CEO Jeff Bezos. Photo: David McNew/Getty Images.

Amazon’s planning to “significantly” increase its spending in video content, as it gets more serious about taking on Netflix in the online video streaming space.

During its earnings call with the press on Thursday, Amazon CFO Brian Olsavsky stressed that it’s seeing better engagement and conversions from Prime members who use the video service, and that a lot of the future investments will focus on boosting its video offerings.

“One of the larger investments is our content spend…We like the results because we see better engagements, better free trial conversions from Prime members who use the video service,” Olsavsky said. “We’re going to significantly increase our content spend, some of it is in Q2 guidance, but we’ll be expecting more of it in the backend of the year certainly.”

Online video has been a major investment area for Amazon lately. Its original TV series “Transparent” and “Mozart in the Jungle” have won Golden Globe awards recently, while the e-commerce business was the biggest spender at this year’s Sundance Film Festival.

And then earlier this month, in a clear sign that Amazon’s going after Netflix, the online retail giant made its video service available to non-Prime members, too, launching a standalone video service that can be purchased month-by-month. Until then, Amazon’s video content was only available to Amazon Prime members, its $99 annual membership program that gives access to two-day free shipping and a bunch of video and music content, as well as cloud storage space.

Amazon didn’t specify the size of the investment or exactly where the money will be spent. But it’s likely going to be spent on improving its original content, a space where Amazon is known to lag behind Netflix and HBO.
As this chart from Morgan Stanley shows, most people believe Netflix and HBO have better original content than Amazon.

Screen Shot 2016 04 28 at 4.22.07 PM

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.

NOW WATCH: ASSAULT RIFLES AND BATH SALTS — John McAfee tells the inside story behind his outrageous viral video