Amazon chases Netflix with foray into film production

20 Jan 2015 | Author: | No comments yet »

Amazon branches out to launch movies for cinema release.

After proving it can rub elbows with television’s elite, the Web giant best known as a one-stop online retail shop announced it is joining the fray to produce and distribute movies. The US retailer has already developed several of its own original TV shows, including Extant and Transparent – which was the first ever online series to win a Golden Globe.

Not content with signing up director Woody Allen to create a TV series and winning two Golden Globe Awards for its original TV seriesTransparent, the online retail and streaming giant Amazon is now making a foray into the world of independent movies.Amazon Studios announced Monday that it will significantly expand into movie production by acquiring films for theatrical release and early-window streaming through its subscription service, Amazon Prime Instant Video. The company is aiming to produce up to 12 movies a year, all of which will be initially released in cinemas, before being made available on Amazon’s Prime video service within two months. Amazon’s decision to release their films in cinemas rather than exclusively online may be linked to the fact that a movie that attracts paying ticketholders is still seen as having a certain prestige, said Phil Contrino, chief analyst at Boxoffice.com. “At the end of the day a theatrical release still generates a lot of publicity, it gets a movie reviewed – every person that goes to watch that movie is paying for it,” he said. While modest compared with Hollywood blockbusters, the move will add to already hefty spending at Amazon, potentially unnerving investors concerned about the company’s lack of profitability.

Independent film producer Ted Hope, who co-founded the production company Good Machine, will oversee creative development for the new unit, Amazon Original Movies. Such films have proved challenging even for major Hollywood studios such as Paramount and Warner Brothers, which have bowed out of the business in recent years, said Jeff Bock, Box office analyst at Exhibitor Relations. “It’s a tough, tough racket to play consistently,” he said, pointing to the difficulty of getting good content and the competition for quality productions at festivals like Sundance. Amazon’s strategy chases the move by Netflix, which found success in original TV programs with “House of Cards” and “Orange Is the New Black,” to also produce movies. Netflix’s first theatrical feature, coming this summer, will be a sequel to “Crouching Tiger, Hidden Dragon.” That film is produced in conjunction with the Weinstein Co.

Amazon’s entry into movies also comes on the heels of Sony Pictures’ unprecedented digital distribution of the Seth Rogen comedy “The Interview,” the first major studio film to be released simultaneously in theaters, online and on video-on-demand platforms. It remains unclear whether Amazon believes the movie business can make money on its own, but most of its other ventures are ultimately aimed at bolstering its underlying retail business. Amazon founder Jeff Bezos is known for his hunger to tackle new markets but the company has had a mixed track record, as with the recent Amazon Fire phone, whose price tag it has slashed after weak sales.

The big difference between the two competitors: Netflix will release films simultaneously online and in theaters, while Amazon will be more friendly to theater chains. “Amazon Prime is now a threat to Netflix,” said Jeffrey Cole, director of USC’s Center for the Digital Future. “And now with successful original programming and theatricals, it’s a movie studio and a network, with very deep pockets.” “We live in an always on, connected world where consumers walk around with an HD movie screen in their pockets,” said Richard Greenfield, a senior analyst at investment firm BTIG Research. “Yet the movie industry lives by antiquated release windows that not only frustrate consumers, but fail to maximize studio profitability.” Amazon has shown an interest in film for some time. On Friday, Patrick Corcoran, vice president of the National Association of Theater Owners, fired back at those who saw Sony Pictures’ digital release of “The Interview” as a sign of things to come. Corcoran said the movie’s release “doesn’t change anything,” and noted that its two-week $31.5 million digital gross was far less the film would have made at multiplexes.

The company spent an estimated $2 billion on content in 2014 with about $200 million of that used to develop original shows, according to Wedbush Securities analysts. Such projects include “Mozart in the Jungle” and the multi-Golden Globe Award-winning “Transparent”. “The Golden Globes, they got that, now the next step is Oscar nominations,” Bock said, adding that only theatrically released movies are eligible for Hollywood’s biggest award.

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