Amazon banks big on video and music content as ad growth slows

Amazon's spending video and music content has increased from US$1.5 billion in the first quarter of 2018 to US$1.7 billion in the same period this year. Speaking to analysts in an earnings call, Amazon’s director of investor relations Dave Fildes said that digital video is an area the company is "excited" about and will be continuing to "invest meaningfully" in.

The 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 the eCommerce giant's quarterly filing. It added that its produced and licensed video content is primarily monetised together as a unit through its Amazon Prime memberships across major geographies. The total capitalised costs of video and music content was US$4.2 billion as of 31 March 2019, compared to US$3.8 billion as of 31 December 2018.

Meanwhile, sales from "other" businesses that primarily comprise sales of advertising services rose every so slightly from US$2031 to US$2716 in the first quarter of 2019. The growth rate appears somewhat lacklustre after Amazon hit the US$10 billion in advertising revenue in 2018.

This trend is despite Amazon jumping from US$2699 million in marketing costs the previous quarter to US$3664. The company attributed the increase mainly to increased spending "on online marketing channels, as well as payroll and related expenses for personnel engaged in marketing and selling activities."
It added in the filing, "While costs associated with Amazon Prime memberships and other shipping offers are not included in marketing expense, we view these offers as effective worldwide marketing tools, and intend to continue offering them indefinitely."