How the epic 'Lord of the Rings' deal explains Amazon’s slow-burning media strategy.
When Amazon pursued the rights to a"Lord of the Rings" series in 2017, the company knew it would have to overcome some major obstacles to lure the J.R.R. Tolkien estate to its video-streaming platform.
But money alone wasn't going to separate Amazon from the pack — Amazon's $250 million offer wasn't even the highest bid for the show's rights, according to a person familiar with the matter. The ultimate selling point, according to people with knowledge of the negotiations, related to Amazon's original business from over two decades ago: books.
The company can afford to take a similar long view with its media business and try many different approaches. So far, Amazon has used video primarily as a way to build Prime subscriptions. But the company's investments point to blending content and commerce in ways the world hasn't yet seen, eventually pitting Amazon against Apple and other tech giants for control of the home.
Apple has a similar plan in mind with its yet-to-be-released streaming service, which will offer device owners free video and subscriptions to third-party cable channels, according to people familiar with the matter. The idea is to give users enough value that it becomes a hassle to ditch the hardware.
Hirsch said Channels has helped Starz, which is owned by Lionsgate, attract a broader audience of subscribers, because they can get the channel via the Amazon app rather than having to download the separate Starz app through Roku, Apple TV or another streaming device. Amazon also poses less of an existential threat in media than Apple, which blew up the music industry by eradicating album sales with 99-cent digital tracks, or Netflix, the original Hollywood disruptor.
Amazon will be"one of the biggest friends to viable specialty channels in the next several years," Seibert said."Offering media is a great service for customers looking for something special." Still, Amazon hasn't rolled out a three- or five-year plan to reach Netflix-level spending. In fact, the company has no specific multiyear road map at all when it comes to content purchases, according to people familiar with the matter. Bezos and Jeff Blackburn, senior vice president of business development and digital entertainment, prefer not to plan more than 12 months in advance, the people said.
Price's division also had some expensive misfires, such as Spike Lee's 2015 film"Chi-Raq" and a disastrous five-year movie deal with Woody Allen, who's now suing Amazon Studios in a $68 million breach-of-contract lawsuit. Amazon didn't make Salke available for an interview for this story. An Amazon spokeswoman declined to comment for the story.
In August, Amazon hired Marie Donoghue from ESPN to run sports programming, and the company will almost certainly become more aggressive at buying live sports rights in the coming years, according to people familiar with the company's long-term strategy. Separate from Amazon Studios, Donoghue's team also reports to Blackburn.
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