Amazon will spend about $US4.5 BILLION on its fight against Netflix this year, according to J.P. Morgan

Jeff Bezos
Amazon CEO Jeff Bezos Michael Seto/Business Insider

Amazon is set to spend a gargantuan ~$US4.5 billion on video in 2017, according to analysts at J.P. Morgan, a figure that would put the internet giant much closer to rival Netflix than many industry observers thought.

In July, Amazon CFO Brian Olsavsky said Amazon would “nearly double” its investment in video, while “tripling” its amount of original content in Prime Video, over the remainder of 2016. This new estimate from J.P. Morgan on the 2017 budget suggests that spending will continue to blast upward.

Even so, Amazon would still sit below Netflix’s $US6 billion content budget for 2017. But $US4.5 billion would make Amazon a major, major player in the market. For reference, HBO spent around $US2 billion on programming in 2016, and while Time Warner CEO Jeff Bewkes said that budget would rise a bit this year, he characterised the 2017 HBO programming budget as a “couple of billion dollars” in December.

Global domination

In December, Amazon took Prime Video global by launching in over 200 countries. At the same time, Amazon has beefed up its originals, paying a reported $US250 million for “The Grand Tour,” its blockbuster car show from the “Top Gear” team. “The Grand Tour” and “The Man in the High Castle” are Amazon’s two most popular shows in most countries, Amazon Studios boss Roy Price revealed this week.

Price characterised Amazon’s video focus as “the crème de la crème,” its blockbuster shows. The “actual shows people are talking about,” he said. These might cost hundreds of millions, but they are key for the business.

“It’s actually efficient and good economics,” Price said of “The Grand Tour.”

But Amazon isn’t only focused on shows. Amazon and the NFL recently struck a $US50 million deal for Amazon to stream 10 Thursday night games, according to The Wall Street Journal. This is a similar deal to the one the NFL had with Twitter last year, except about five times larger for the same number of games. These games will only be available as part of Amazon Prime Video, and the general public won’t be able to watch.

“We’re focused on bringing our customers what they want to watch, Prime members want the NFL,” Amazon SVP Jeff Blackburn told the Journal.

If this NFL deal proves a success, it could embolden Amazon to further go after the cable and satellite TV industry, which has seen competition from streaming TV packages. YouTube, Hulu, AT&T, and others have recently jumped into market, and Amazon has long been rumoured to be working on its own.

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