Amazon is preparing to increase its programming spend on Prime Video despite posting a 77% fall in quarterly profits.
The Seattle-based company filed revenues of US$38bn for the second quarter, up 25% on the same time last year. But profits fell to US$197m from US$857m and Amazon said it could lose up to US$400m in operating profit during the next quarter.
Shares fell around 3% on the results, which were affected by heavy investment in new technology, global expansion and the company’s Prime delivery service.
Amazon revealed it would be investing further over the coming months. Chief financial officer Brian Olsavsky said: “Video content spend will continue to grow, both sequentially and quarter-over-quarter.”
The company’s SVoD service, which comes free with the US$99 per year shipping service Prime, had helped Amazon retain customers, Olsavsky said.
He added that Prime subscription revenue was up 52% year-on-year, prompting analysts such as US-based Cowen & Co to predict that more than half of US households would hold membership by the end of this year.
Amazon Prime Video was rolled out globally in December last year and the service has been investing heavily in content, buying the second season of Deutschland 83 and making its first two-season order, for The Marvelous Mrs Maisel.
It has also appointed numerous executives, including former FremantleMedia International exec Georgia Brown who will oversee its original European output.
In October, the executive team of the company’s streaming arm was reorganised. Morgan Wandell, previously head of drama at ABC Studios prior to moving to Amazon in 2013, moved up to head of international productions, overseeing original projects outside the US.
The results mean that Amazon founder Jeff Bezos’ reign as the richest man in the world was short-lived. His fortune was estimated over the $90bn Bill Gates mark at the start of Wednesday but had dipped back down to $89bn by yesterday.