Amazon’s Prime Video: A Strategic Player in the Streaming Wars

In the increasingly competitive streaming landscape, Amazon Prime Video stands out with a unique approach that balances content creation with broader business objectives. In a recent interview with CNBC’s Julia Boorstin, Mike Hopkins, Head of Amazon Prime Video and MGM Studios, outlined the company’s distinctive strategy in the evolving media ecosystem.

“We really want to drive Prime membership. We want to retain customers and be a reason why people want to subscribe to Prime,” Hopkins explained. Unlike pure-play streaming services, Prime Video serves a dual purpose: enhancing the value of Amazon Prime while simultaneously building a standalone entertainment business that includes rentals, purchases, and advertising.

This dual approach explains Amazon’s seemingly counterintuitive investment in theatrical releases despite the box office’s post-pandemic struggles. “We see a big opportunity for the theatrical business in itself,” Hopkins noted. “The selection of movies has decreased over the last few years. We’re actually adding back to that some of that selection for moviegoers.”

According to Hopkins, theatrical releases create multiple revenue streams: box office returns, digital rentals and purchases (where Amazon has “a big market share”), and eventually exclusive streaming on Prime Video. This windowing strategy maximizes the value of Amazon’s content investments across different platforms.

Sports has become another key pillar in Amazon’s content strategy, with significant investments in NFL Thursday Night Football, NASCAR, and recently, NBA rights. “Having must-see television, must-see sports will drive Prime subscriptions. It’ll also retain members over long periods of time,” Hopkins said, according to CNBC.

Interestingly, Prime Video serves as an entry point to Amazon’s ecosystem in international markets. “Around the world, Prime Video is sort of the first entry point for Amazon in many of these countries,” Hopkins revealed. “Our job there in Brazil, Mexico, India and some other local is to actually drive members to Prime and then introduce them to shopping.”

The advertising business, launched in January 2023, has quickly become a significant revenue driver. “We have more people watching video advertising on Prime Video than any of our competitors,” Hopkins claimed, highlighting Amazon’s “full funnel approach” that can track customer journeys from video ads to purchases on Amazon.com.

When discussing content investment strategy, Hopkins emphasized the need for balance between broad appeal and niche programming. For major investments like “The Lord of the Rings: The Rings of Power,” he explained that such shows “need to translate around the world and reach a lot of people.” Amazon produces approximately 240 local originals in different languages globally, complementing these tentpole productions.

Looking ahead, Hopkins sees artificial intelligence transforming both content creation and discovery. “Every team at Amazon is developing tools using AI,” he said, envisioning improvements in content recommendations and even near-instantaneous dubbing and subtitling of international content with realistic lip-syncing.

Regarding the future of the James Bond franchise, which Amazon acquired through its MGM purchase, Hopkins expressed excitement while acknowledging the legacy: “It’s one of those characters that’s lasted 60 years of filmmaking. A lot of respect for everything that’s come before what we’re gonna do.”

As streaming competition intensifies, Amazon’s strategy of leveraging Prime Video to enhance its broader ecosystem while building a standalone entertainment business may provide the company with advantages that pure-play streaming services cannot match.

Source: CNBC interview with Mike Hopkins, Head of Amazon Prime Video & MGM Studios