It’s no secret that Amazon.com, Inc. (AMZN) is basically taking over the world — AMZN stock owners are well aware of Amazon Prime Video, the online streaming service available to Amazon Prime members.
What’s new is the fact that Amazon’s video content is actually getting good — really good. It received five 2016 Golden Globe nominations, winning two Sunday.
“Mozart in the Jungle” won for Best Comedy and its star, Gael Garcia Bernal, won for Best Actor in a TV Comedy. And even though rival Netflix (NFLX) got eight nominations, the famed streaming service didn’t take home a single win.
So, now that Amazon’s shows are critically acclaimed, how will AMZN stock be affected? We’ll have to wait and see, but over the long-run, I have a difficult time believing this won’t work out well for shareholders.
As Amazon stated in its 2014 annual report:
“Finally, our business model for original content is unique. I’m pretty sure we’re the first company to have figured out how to make winning a Golden Globe pay off in increased sales of power tools and baby wipes!”
Another Prime Source of Growth
Last year was the year of the streaming stock: AMZN is up more than 100% in the last year, with NFLX shares soaring more than 140%. I wouldn’t expect that to happen again, but I’m still bullish on Amazon stock, which I own myself.
The reason Amazon’s video content is so powerful, is that it helps in a major way to recruit Amazon Prime subscribers, which pay $99/year for access.
Not only does an Amazon Prime subscription give you access to streaming video, but to streaming music, and perhaps the biggest perk, free 2-day shipping on Prime-qualified Amazon products, of which there are many. As Amazon extends its same-day delivery across the country, that, too will be covered by Prime.
With the number of Amazon Prime members estimated at about 40 million, AMZN is raking in $4 billion in annual membership fees alone. And considering the fact that Amazon Prime members consistently buy more product than non-Prime members, it’s fairly clear how growing its subscriber base benefits the company in the long-term.
It’s not even just premium original content that makes Amazon a streaming video powerhouse. In the first-ever of its kind, AMZN and the White House have struck a deal making President Obama’s final State of the Union address available on its video platform. It won’t be a live stream, and you don’t have to be a Prime subscriber, but from Wednesday through the end of the week, you’ll be able to watch Obama’s address in full on Amazon.com.
For the White House, it’s a nod to how cord-cutters are becoming increasingly relevant. For Amazon, it’s another notch in its streaming belt.
As of this writing, John Divine was long AMZN stock. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
