Amazon plans to spend more than $US1 billion ($1.5 billion) a year to produce movies that it will release in cinemas, according to people familiar with the company’s plans, the largest commitment to movie theatres by an internet company.
The world’s largest online retailer aims to make between 12 and 15 movies annually that will get a theatrical release, said the people, who asked not to be identified because the company is still sorting through its strategy.
Amazon will release a smaller number of films in cinemas next year and increase its output over time. That number of releases puts it on on a par with major studios such as Paramount Pictures.
Streaming services have eschewed cinemas with most of their original movies, or released the titles for less time and on fewer screens than traditional movie studios. Netflix in particular has aggravated cinema chains by releasing more than a movie a week for viewers at home. The streaming giant released a sequel to Knives Out in US theatres on Wednesday. It will stay there for just one week, however, before heading to streaming next month. The original film grossed $US312.9 million theatrically in 2019.
Amazon has been more open to cinemas than Netflix, but has yet to invest as much money in original movies. While Netflix releases close to 100 movies a year, Amazon puts out just a couple dozen, many in languages other than English.
“Amazon.com’s plans to invest $US1 billion to produce 12-15 movies a year for release in cinemas is a vote of confidence in the theatrical model,” Bloomberg Intelligence analyst Geetha Ranganathan wrote on Wednesday in a note. It could “easily boost receipts by 15 per cent to 20 per cent given Universal and Warner have roughly similar budgets.”
The news lifted shares of cinema operators on Wall Street. AMC Entertainment Holdings, America’s largest chain, rose as much as 9.2 per cent to $US7.99 in New York. Cinemark Holdings advanced as much as 12 per cent to $US13.78.
Even though Amazon is in a cost-cutting mode, the company is ramping up its investment in original movies following the $US8.5 billion acquisition of MGM, a 98-year-old Hollywood studio that released Ben-Hur and Legally Blonde. Its franchises include Rocky and James Bond, which it releases in conjunction with the family of producer Albert Broccoli.
MGM’s two top film executives, Michael DeLuca and Pam Abdy, left Amazon just a month after it acquired the company, and Amazon Studios chief Jennifer Salke has been looking for an executive to run the film business.
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