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 Amazon said on Monday it was aiming to produce close to 12
movies a year for theatrical release which would then be
available on its Prime video service within two months,
significantly faster than the roughly one-year wait it normally
faces to stream Hollywood releases.
Amazon expects to focus on "indie" movies with budgets of
between $5 million and $25 million, spokeswoman Sally Fouts
said. While modest compared with Hollywood blockbusters, the
move will add to already hefty spending at Amazon, potentially
unnerving investors concerned about the company's lack of
profitability.
Such films have proved challenging even for major Hollywood
studios such as Paramount and Warner Brothers, which have bowed
out of the business in recent years, said Jeff Bock, Box office
analyst at Exhibitor Relations.
"It's a tough, tough racket to play consistently," he said,
pointing to the difficulty of getting good content and the
competition for quality productions at festivals like Sundance.
The move shows Amazon's growing ambitions in digital media,
coming just days after the online retailer signed director Woody
Allen to create a TV series and one of its existing series won a
Golden Globe Award, a first for Internet TV services.
Unlike rival Netflix Inc, a standalone Internet TV service,
Amazon's Prime video service comes bundled with the Internet
retailer's two-day delivery for items purchased on the site,
which costs $99 a year, a key driver of revenue for the company.
'SPECIALIZED FILM VIBE'
It remains unclear whether Amazon believes the movie business
can make money on its own, but most of its other ventures are
ultimately aimed at bolstering its underlying retail business.
Amazon founder Jeff Bezos is known for his hunger to tackle new
markets but the company has had a mixed track record, as with
the recent Amazon Fire phone, whose price tag it has slashed
after weak sales.
Its movie-production gamble ups the ante for Netflix, which said
in September it would jointly produce a sequel to "Crouching
Tiger, Hidden Dragon" and in October signed a deal for comedian
Adam Sandler to star in and produce four films to be shown
exclusively on the service.
Amazon said it has hired Ted Hope, a producer of independent
movies including "Crouching Tiger, Hidden Dragon" and Academy
Award-nominated "Eat Drink Man Woman", to spearhead the effort.
“He’s very much tuned into the indie world and the specialized
film vibe," said Paul Dergarabedian, an analyst at Rentrak.
"It’s just a way to get out the kind of edgy, interesting and
sometimes enlightening content that these films sometimes
provide."
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If successful, Amazon Original Movies could further threaten
traditional big-screen movie theaters, which have been coping with
dwindling audiences. Sony Pictures' recent success in releasing its
comedy "The Interview" through video-on-demand services after
threats from hackers was also seen as a blow to big-screen
businesses.
"That verbiage probably scares theater owners," Bock said, referring
to Amazons' plan to narrow the window between theatrical releases
and streaming availability, adding that the theater chains could
take some solace in Amazon's decision not to go for simultaneous
release or just putting films straight out on video.
National Association of Theater Owners Vice President Patrick
Corcoran declined to comment on Amazon's move but said the time
between theatrical and home video release would play into theaters'
decision on whether to take a particular film.
Some theater chains objected vociferously when Netflix said it hoped
to release the "Crouching Tiger, Hidden Dragon" sequel in select
IMAX theaters and its streaming service at the same time.
Amazon may have decided to target theatrical releases rather than
pushing movies straight to Prime because big name talent still
associates paying ticketholders with prestige, said Phil Contrino,
chief analyst at Boxoffice.com.
“At the end of the day a theatrical release still generates a lot of
publicity, it gets a movie reviewed – every person that goes to
watch that movie is paying for it," he said.
While Hope is known for making independent movies rather than
big-budget Hollywood blockbusters, Amazon Studios has succeeded in
the world of television in part by aligning itself with high-profile
directors like Allen and Steven Soderbergh of "Ocean's Eleven" fame.
The company spent an estimated $2 billion on content in 2014 with
about $200 million of that used to develop original shows, according
to Wedbush Securities analysts. Such projects include "Mozart in the
Jungle" and the multi-Golden Globe Award-winning "Transparent".
"The Golden Globes, they got that, now the next step is Oscar
nominations," Bock said, adding that only theatrically released
movies are eligible for Hollywood's biggest award.
(Adds missing words throughout due to technical problem)
(Reporting By Shubhankar Chakravorty and Sneha Banerjee in Bengaluru,
and Christian Plumb and Hilary Russ in New York; Editing by Nick
Zieminski and Alden Bentley)
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