Amazon expands its reach into every aspect of retail from e-books to groceries and clothing, one of its biggest expense items has little to do with shopping. Sources telling Reuters that video is now Amazon's second biggest consumer expense after shipping. Reuters correspondent Jeffrey Dastin in San Francisco explains.
>> Amazon sees video as a key way to get people to sign up for its Prime shopping club and the company said it tracks very closely when people are on a free trial Prime, are they more likely to sign up for the $99 a year version if they are watching video or if they're not.
The answer is that video helps dramatically with converting those customers, therefore, it's a worthy investment.>> Analysts estimate Amazon's spending on content will have tripled since 2014 to at least $4.5 billion this year. Some of Amazon's most expensive video plays include a $10 million deal to score the distribution rights in North America to its Oscar winning Manchester By the Sea.
It dished out around $50 million to stream ten Thursday night games for the NFL this year, five times what Twitter had paid for the same rights. But the company is giving few details about how those huge investments in video are paying off.>> Investors have no way of evaluating whether Amazon is spending this money wisely, they can look at the shows and films that it produces, but they don't really seen viewership data.
There's no Nielsen equivalent for a streaming company like Amazon, and they don't really see how many people are really signing up for Prime because of video and therefore, just left at Amazon's word that it's working.>> Despite any concrete numbers, shareholders are giving Amazon a pass when it comes to splurging the big box on video, partly due to its apparent success among critics.
Amazon has won Golden Globes for its original television shows and this year, it took home three Academy Awards, a first for a streaming service.>> Congratulations.