Amazon's original video series have become a key component of Prime membership and a competitor to Netflix. It has long since been known that the business strategy of Prime Video is to convert viewers into shoppers that spend more money on physical products, but the actual data to support this has never before been available.
Now for the first time ever, Amazon's internal documents have been viewed by Reuters and reveal some important information. There are 19 Prime Original series that production costs, number of viewers, and conversion rate of subscribers have been seen. It is estimated that nearly 25 percent of Prime subscribers between 2014 and 2017 have been sucked in by original video content.
To calculate the number of viewers turned into regular Prime subscribers, Amazon keeps count of the first video that each member views. The first video that is streamed is marked as the content that brought in the subscriber.
One of the more popular Prime Original's is "The Man in the High Castle." The German victory of World War II plot had eight million US viewers near the beginning of 2017. At a production cost of $72 million, there were 1.15 million Prime subscribers brought in from the show. Crunching the numbers indicates that it cost Amazon just $63 per new Prime subscriber as a result of one original series.
Another major success for Amazon has been the spin off of BBC's Top Gear. The Grand Tour has racked up more than 1.5 million first streams by Prime members globally. Members turned into paying Prime subscribers cost Amazon only $49 per new member during the first season.
Not every show is a success though. "Good Girls Revolt," a story on gender inequality within a New York newsroom was a complete and utter failure from a business standpoint. The program cost $81 million to produce and market but only managed to achieve 52,000 first streams. At $1,560 per new customer, the decision to cancel any further production after the first season was swift.
In total, more than 26 million US consumers, nearly half of households, hold Prime memberships and have viewed Prime Video. From document data, there are believed to be more than 75 million Prime subscribers worldwide. Amazon will be developing more drama series and spin-off series to attempt to grow Prime outside of the United States where the potential for growth is largest.
Considering that Prime costs $99 annually for US residents and fairly similar pricing abroad, investors should be pleased with the new found information. Prime customers are known to spend significantly more money, as much as ten times more, and place orders more frequently than regular members. Not only has Amazon brought in many new members with original video content, it has done so at what appears to be very affordable marketing costs.