Amazon invests $1 billion a year in movies for theaters
Amazon plans to spend more than $1 billion a year to produce movies for theatrical distribution, reports Bloomberg.
The world’s largest online retailer aims to produce 12 to 15 movies a year that will be released in theaters, said the people, who asked not to be named because the company is still working on its strategy. In the coming year, Amazon will release a smaller number of movies, and over time will increase the volume of production. Such a number of releases puts it on a par with major studios.
Streaming services typically avoid releasing their movies in theaters or release them for a shorter time and on fewer screens than traditional studios. Amazon has been more open to theaters than Netflix, but has yet to invest as much money in original movies. While Netflix releases about 100 movies a year, Amazon only releases a couple of dozen.
“Amazon.com’s plans to invest $1 billion to produce 12-15 movies a year for release in cinemas is a vote of confidence in the theatrical model,” Bloomberg Intelligence analyst Gitta Ranganathan said. It could “easily boost receipts by 15%-20% given Universal and Warner have roughly similar budgets.”
This news raised the shares of cinema operators. The largest network AMC Entertainment Holdings Inc. rose 9.2% to $7.99 in New York. Shares of Cinemark Holdings Inc. rose by 12% to $13.78.
Even as Amazon is in cost-cutting mode, the company is increasing its investment in original movies after its $8.5 billion purchase of 98-year-old Hollywood studio MGM, which produced movies such as Ben-Hur and Legally Blonde. Their franchises include Rocky and James Bond. Two of MGM’s top executives, Michael DeLuca and Pam Abdi, left Amazon just a month after acquiring the company, so Amazon Studios chief Jennifer Salke is looking for an executive to run the movie business.
Founder Jeff Bezos has also pushed his Hollywood studio to develop and release more commercial material, which led to the recent The Lord of the Rings TV series, as well as projects like The Terminal List, a show starring Chris Pratt. All of the streaming companies, including Netflix and Apple, have invested more money in original TV before progressing to film.
Movie theaters will be happy with the new product from Amazon. Ticket sales in the US fell more than 33% compared to 2019, the last full year before cinemas were closed due to the pandemic.
Still, despite the decline in ticket sales, filmmakers, Hollywood veterans and talent representatives are pushing for media companies to return to theaters. They believe that a big hit in theaters is more profitable than even the biggest streaming movie.