How Does Amazon Prime Video Makes Money? (Business Model + Examples)
Published On July 9th, 2024 How To
Its in news that might spark even more fear in the film & television content that are watched more often. Data shows that Amazon’s original shows and movies have triggered the internet and e-commerce to power up, furthermore creating a massive customer base.
Amazon has spent millions of revenue to pump out a collective content pieces of new streaming television series and movies over the last few years.
Many businesses are likely to invest & viewed this movie as a means to diversify and expand their reach for profiting in a quickly changing entertainment industry.
Along with Netflix, companies like Amazon or Hulu have achieved to create a new market that is changing the way people consume content such as movies, TV shows or any video content in general.
The previous year 2021 accounts, Amazon’s on-demand service that is, Amazon Prime Video to be the second most searched video streaming service around the world just after Netflix.
What’s more! It occupies the 2nd position in the growing subscription video on demand industry..
Now, that’s something to boast about!!
Although more & more OTT services are paving its way to the market such as Disney+, HBO Max, Paramount+ the number of Prime Video subscriptions are projected to rise.
Jeff Bezos’s first foray into the movie industry started in November 2010 when the organization launched Amazon Studios.
That was a period when movies where developed with a grassroot level approach.
Amazon earnestly offered $2.7 million💱 to popular filmmakers & creative writers through a series of monthly & annual awards.
Bezos has made original content one of the Amazon’s most public endeavours and Amazon is expected to spend on new original streaming of roughly about $5 billion. Yet this minimal investment is just a drop in the ocean for a company that’s expected to reap in $234.22 Billion 💰 in revenues seen in 2018. Rest is history…
Table of Contents
What Is Amazon Prime Video?
Amazon Prime Video or simply Pime Video is an American subscription video on-demand plus OTT platform with rental service, offered by Amazon as a standalone service.
The service which is a part of Amazon’s prime subscription, distributes content such as films and television series produced by Amazon Studios and MGM Holdings.
It is also licensed to Amazon originals with the service also hosting content from other providers, content add-ons, live sporting events and video rentals along with purchasing services.
With the membership, viewers of any region can watch hundreds of TV shows & movies on their favorite Amazon fire TV app devices. The service which operates worldwide will require a prime subscription to be accessed.
In countries like United States, United Kingdom, Germany the service can be easily accessed without a full prime subscription. But in other countries like Australia, Canada, France, Turkey, India, Italy can be accessed only via a dedicated website.
Additionally, they offer content add-on service in the form of streaming channels named after Amazon or Prime Video.
That allow users to subscribe added video subscription services from other content providers within the OTT platforms.
How Amazon Prime Video Works?
Just like Netflix, Amazon Prime Video is home to many popular movies or shows & to other streaming services.
It allows users to enjoy on-demand movies & TV shows via web browser, mobile app on their phone, or even on television streaming device or gaming console.
The service also produces original tv shows & movies. Prime Video capacitates every target audience by enabling them to watch favourite shows & award-winning films from HBO, Starz channels & lots more.
The streaming service which has 24,000+ movies and 2,100 shows to watch provides options to rent or buy additional movies with TV episodes that aren’t included in subscription package.
Also subscribers get options to add over 100 premium channels with prime video channels, which clears the doubt of how does amazon actually make or multiply money at a fast pace.
When it comes to Amazon Prime’s profitshare in video monetization, it isn’t surprising that new members can get a benefit of free trial which includes Prime Video for 30 days.
Pretty much that’s one of longest free trial periods users may get for any streaming service. After the trial plan, they can continue paying the regular rate or can feasibly cancel their chosen membership.
Furthermore, as subscribers if you are looking how to download Amazon Prime movies, then checkout the way below:
- Firstly, find a movie that you need to download
- Later tap on the download button
- Select the quality based on data storage allowance
- Click “Make this my default setting” if you want to use this quality
- Once the download button changes to complete you can watch it
- To find your TV shows tap 3-lined menu in top left corner
- Tap downloads in the rollout menu
- Select the content & tap on the play button
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The Impact of Amazon Prime Video
You’ll be surprised to know that the world’s leading video business platform takes an annual turnover of more than 100 billion 💸 USD and has an exponential growth. It is because Amazon Prime is one of the world’s leading subscription businesses.
Nevertheless, the service is believed to have above 80 million members all over the world.
Amazon Prime members pay an annual sum of 99USD which monthly counts up to 10.00 USD and it is the primary purpose to create loyalty between Amazon and its customers.
Moreover, it provides its Prime members with unique content which includes data storage, movies & music.
The most important reasons are certainly lets us know that Amazon’s ability is to think out of the box which is in relation to customers and the industry provides opportunities for them to reinvest their earned profits.
Secondly, the company’s potential to think over strategically, innovatively & farsighted holds importance at the same time. Relatively, Amazon Prime changed Amazon from being a traditional e-commerce business to a unique subscription business.
Since the year 2016, Amazon is still in direct competition with the U.S online marketers in 2013. In addition to tough-tie competitors there are video streaming services like HBO and Hulu, or cloud storage services such as Dropbox come into the picture.
Furthermore, as Amazon enters into different markets, they have become a little vulnerable to competitors like app-based e-commerce start-ups and big giants like Google and Uber.
Nevertheless, Amazon still currently obtains a leading position in the market.
What does it cost to run Amazon Prime Video?
More of Organized Content
It is obvious that one doesn’t bump into a streaming service without knowing their content prevalence. That means it’s all the more essential that streaming business model offers the best original content to stand out.
This determines the cost of running Amazon Prime Video in terms of quality with quantity & they chart high.
Licensing Cost Factor
It doesn’t stop with furnishing full of original content, but get the access of licensed broadcasting in hand. Whether for any genre, either retro crime, drama, comedy, users will surely enjoy something on Prime Video.
One thing to note is as selection does constantly change, the contracts expire and licenses may not be renewed. Content producers need to meet this factor.
High-end Techies
Amazon Prime Video lets the target audience watch lots of content in high resolution that includes nearly original streaming. Unlike other streaming services that charge extra of this factor, it’s included in the same Pime Video plan.
All it requires is to have a stable internet connection with atleast 15Mbps download speed to ensure your service stays satisfactory.
Supports Plenty of Devices
What’s good if a streaming service can’t be watched any of your devices? Thankfully, Amazon Prime Video supports a huge range of streaming devices.
This includes Amazon products such as Fire TV, Echo, set-top boxes, smart TV app, mobiles, gaming consoles & more.
You can check out the full list of supported devices page of Amazon for more information.
Have Options to Rent or Buy Additional Content
Everything that every user would want to watch would be available in Amazon Prime Video subscription, except for licensing restrictions.
However, Amazon offers additional content which can be bought or get on lease(rent). This includes recent theatrical releases. Also as consumers you could wait to see if it comes in package down the line & buy it as you may still watch when your subscription expires.
Watch anything offline
Do you often get buffers or drop out while watching videos? Are you travelling & be without WiFi? If so, you’ll be please to hear that Amazon Prime video revenue model includes offline downloads.
As long as the media remains on it, it’ll remain on your OTT devices. Users can watch it as much they like to without any need of internet connection & it’s perfect for remote trips.
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How Does Amazon Prime Video Earn Money?
Amazon Prime Video makes money through subscription fees, advertisements, rentals (pay-per-view), content licensing, etc. Amazon Prime video’s business model is summarized below for your convenience.
- Subscription based model: As mentioned, users pay a monthly or annual fee to access the content on Amazon Prime Video.
- Advertisements: Amazon Prime Video generates revenue through advertising, shown before or during video playbacks.
- Digital purchases and rentals: The platform allows users to purchase or rent digital copies of movies and TV shows not included in their subscriptions.
- Merchandising: Amazon also sells merchandise related to their original content, such as t-shirts, mugs, and other items.
- Content licensing: Amazon Prime Video makes money by licensing its content to other platforms or TV networks.
Overall, Amazon Prime Video is a profitable venture of Amazon’s business, contributing significantly to the company’s overall revenue growth and stability.
Amazon Prime Video Revenue
Amazon Prime Video made $31.77 billion in revenue in 2021 alone. The platform garnered 250 million subscriptions worldwide. This is a 31.2% jump from its revenue in 2021– $25.21 billion.
The chart below shows Amazon Prime’s revenue and year-on-year subscription growth for the last five years.
| Financial Year | Amazon Prime Video Revenue (in $) | Amazon Prime Video Y-o-Y Growth (in %) |
| 2021 | 31.8 billion | 25.7% |
| 2020 | 25.2 billion | 31.2% |
| 2019 | 19.2 billion | 35.5% |
| 2018 | 14.1 billion | 45.8% |
| 2017 | 9.7 billion | 52.1% |
Bottomline:
Even though some of its Prime customers are unaware of it, Amazon still derives the majority of its profits from its web hosting and cloud computing infrastructure. There are likely additional advantages of Prime Video that we haven’t covered here, such as the capacity to host watch parties with friends and family. It might end up being your preferred streaming service.
However, investors should be pleased to see that Amazon is investing in the TV and film industries at a time when streaming content is starting to significantly alter the entire media landscape.
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Frequently Asked Questions (FAQ)
The Amazon Prime video business operates mainly on the SVOD (Subscription Video on Demand) model. The platform earns money by charging customers a subscription fee to watch the content. They also provide temporary rentals for movies and television shows, in which subscribers pay for content that is not included in their subscription plan. This is referred to as TVOD (Transactional Video on Demand).
Amazon Prime Video earned an estimated $2.5 billion in revenue in 2017. This is an increase from the expected $2.3 billion in 2016. According to various analyst reports and news channels, Amazon Prime Video’s income is predicted to increase further, reaching $4.5 billion by the end of 2022.
You’re undoubtedly on the right track, given that you have thought of starting a streaming service like Amazon Prime Video. To make this a reality, look for a video streaming solution with impeccable infrastructure, OTT features, and multiple monetization models to build a video streaming website that propels your business growth to new heights.
Blogger & OTT Expert at VPlayed. Interested in digging deep into video streaming media tools, and Love to blog, discuss and share views on the legal OTT app development' & latest technologies tips, and tricks. He's also passionate about photography loves to capture the pure essence of life.
Amazon Prime Video’s revenue model is truly fascinating! The combination of subscription fees, pay-per-view rentals, and even the option to purchase movies and TV shows outright provides users with a variety of choices. It’s clear that Amazon has mastered the art of diversifying its income streams while keeping its audience engaged.
I love how Amazon Prime Video not only offers popular movies and shows as part of the subscription but also provides exclusive content. The original series and movies are a huge draw, making the subscription fee feel totally worth it. Amazon’s ability to create unique, high-quality content is definitely a key driver of their revenue.
As someone who watches the occasional movie, I appreciate the flexibility that Amazon Prime Video offers. Whether it’s paying only for what I watch or subscribing for a monthly fee, the options suit my budget and viewing habits. It’s a clever way for Amazon to cater to both casual viewers and binge-watchers.
The integration of Prime Video within the larger Amazon ecosystem is genius. With the convenience of one-click purchasing and personalized recommendations, it’s no wonder Amazon is making a significant chunk of its revenue from Amazon Prime Video. The ease of transitioning from browsing to watching is a real game-changer.
I’ve noticed how Amazon Prime Video has started hosting live events and streaming sports too. This expansion beyond movies and shows is a brilliant move, tapping into a broader audience base. The multiple revenue streams show that Amazon isn’t afraid to experiment and innovate.
Amazon Prime Video’s strategy of offering add-on channels is so clever. By partnering with other networks and allowing users to subscribe to specific channels, they’re catering to niche audiences while generating more revenue. It’s like having a cable subscription but with way more control.
I appreciate how Amazon leverages the power of cross-promotion. The way they offer discounts on Prime Video subscriptions alongside Amazon Prime memberships is a win-win for users. It’s a testament to their understanding of customer behavior and the synergy between their services.
Amazon Prime Video’s family-friendly profiles and parental controls make it a go-to choice for households with kids. The ability to set spending limits on pay-per-view rentals adds an extra layer of security. It’s clear that Amazon has thoughtfully catered to various user needs, and that’s why they’re raking in revenue.
I’m fascinated by how Amazon Prime Video’s availability spans across the globe. With localization, multiple language options, and region-specific content, Amazon has truly gone global. This commitment to international markets is undoubtedly contributing significantly to their revenue streams. Kudos to them for bringing world cinema to our screens!
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