Amazon disclosed that its spending across TV, film and music content jumped 28% in 2022 — thanks in large part to pricey deals for the NFL’s “Thursday Night Football” and fantasy epic series “The Lord of the Rings: The Rings of Power.”
The ecommerce company’s total expenses for video and music for 2022 were $16.6 billion, up from $13 billion in 2021, Amazon disclosed in its annual report filed with the SEC Friday, a day after reporting mixed results for the fourth quarter of 2022.
Amazon last year premiered Season 1 of “The Lord of the Rings: The Rings of Power,” which had an estimated production budget of $450 million. Last year also marked the first year of Prime Video’s exclusive streaming of the NFL’s “Thursday Night Football” package, under which Amazon is estimated to be paying about $1 billion per year. The tech giant’s 11-year pact with the NFL includes 15 regular-season games and one preseason game per year, with Prime Video also producing pregame, halftime and postgame shows.
On the music front, last fall Amazon Music increased the number of songs available as part of Prime from 2 million previously to its full catalog of 100 million tracks and added hundreds of thousands of podcast episodes ad-free.
It’s not clear what kind of direct return on investment Amazon realized on its content investments. The company has said “The Rings of Power” was the most-watched original series worldwide, attracting more than 100 million viewers and generating more than 24 billion minutes streamed, and also drove more Prime signups worldwide during its launch window than any previous Prime Video content. For the 2022 NFL season, “Thursday Night Football” viewership up 11% from the prior season among the coveted 18-34 demo, according to Nielsen.
In the 10-K filing, Amazon noted that its produced and licensed video content is “primarily monetized together as a unit, referred to as a film group,” in each major geography where it offers Amazon Prime memberships. The company’s total video and music expense includes licensing and production costs associated with content offered within Amazon Prime memberships, and costs associated with digital subscriptions and sold or rented content.
According to Amazon, changes in historical and anticipated viewing patterns are “lengthening the weighted average life of our capitalized video content,” which currently stands at 2.6 years. The company said anticipated changes in viewing patterns will “positively impact 2023 operating income by approximately $1.0 billion, generally ratably throughout the year.”
Separately, Amazon last year closed the acquisition of MGM, a deal valued at $8.5 billion. Amazon said MGM’s library of movies and TV shows was worth $3.4 billion, with the acquisition price including $4.9 billion of goodwill (defined as “the established reputation of a business regarded as a quantifiable asset”).
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