The comment comes after Amazon.com, Inc. (NASDAQ:AMZN) announced at the start of the week that it intends to make about 12 movies every year. The everything store is planning to release these films to theaters and then make them available to Amazon Prime customers within two months.
“It can be [lucrative] but it’s a very risky business and that’s why most movies, most films are created by these large media enterprises such as Time Warner [and] Viacom. It is a very high cost business, very high risk business,” he said.
Nonetheless, even though Amazon.com, Inc. (NASDAQ:AMZN) is entering a very competitive and cost industry, Sweeney notes that it does bring a lot of value particularly because of rights.
“[…] A lot of people see the value in the backend ownership of content whether it’s through traditional syndication around the world which has gotten better and better as more of the world has embraced broadband and video content,” Sweeney said.
He added that Amazon.com, Inc. (NASDAQ:AMZN) will be producing the content themselves and in fact the company has announced that they have signed Woody Allen to create his first television show for the company, a move some derided as meaningless for the company.
Meanwhile, Cory Johnson said that even though the cost may be high, Jeff Bezos and company has recognized the value of having a hit production. Netflix with its “House of Cards” production has generated free marketing because of the popularity of its show and the awards it has been given, he said.
This new attention to the company, particularly if the productions are good, will in turn generate income by attracting more Amazon Prime subscribers, Johnson added. Sweeney agreed saying that Amazon knows its Prime customers spend about four times as much on Amazon compared to regular customers and the company is just trying to make Prime more attractive to people.
Patrick Mccormack’s Tiger Consumer Management owned 208,900 Amazon.com, Inc. (NASDAQ:AMZN) shares by the end of the third quarter of 2014, a 30% decrease in the fund’s stake in the electronic commerce giant quarter-over-quarter.