Amazon.com Inc. (AMZN) recently announced that its Amazon Studios division will begin to “produce and acquire original movies." The first movies will go into production later this year.
Amazon Studios is recognized for television series such as multi-Golden Globe winner "Transparent," Annie-nominated "Tumble Leaf" and "Mozart in the Jungle." It recently finalized the release date for the preliminary season of “Bosch,” its first hour-long original drama series.
Coming to a Theater Near You
Amazon hasn’t announced any specific projects as of now. However, it revealed that it wants to start producing around twelve movies a year. The films will be available on Prime Instant Video in the U.S. just 4 to 8 weeks after its theatrical release.
This is to make sure that Amazon’s prime members need not shell out cash in order to watch them in the theaters.
Amazon said its development efforts will be led by Ted Hope, the co-founder of the production company Good Machine.
Amazon spokeswoman Sally Fouts revealed that film budgets will range between $5 million and $25 million — humble compared to Hollywood blockbusters whose budgets soar above $100 million.
Competition
The announcement intensifies Amazon's competition against Netflix (NFLX), which is also financing movies and trying to minimize the time between a theatrical release and an online release.
Netflix is scheduled to premiere a sequel to the 2000 hit "Crouching Tiger, Hidden Dragon" in August even as IMAX moviegoers watch it in theaters.
However, Amazon's strategy is a little different. It is committed to releasing films in theaters first, while still curbing the window of time it takes to get them online.
Looking Ahead
Amazon has expanded beyond product searches and shopping to explore new areas like mobile technology, by developing the popular Kindle range and the not-so-impressive Fire Phone. It has also made its way into the drone delivery and content creation spaces.
While Amazon is not just starting out in the original content business, the company's short premier timing promise may be a new way to lure subscribers to the fold.
Only time can tell if Amazon Studios will be the next Pixar Animation Studio of Hollywood.
Amazon currently holds a Zacks Rank # 3 (Hold). However, better-ranked stocks in the industry include Alibaba Group Holding Ltd (BABA) and Autobytel Inc. (ABTL). Both these stocks hold a Zacks Rank #2 (Buy).
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