Amazon's Original Shows Are a Hit, Internal Documents Show

Investing in original video content looks like it's been a big hit for Amazon.com Inc. (AMZN) . 

Internal company documents viewed by Reuters show that the retail giant's top streaming shows brought more than five million subscribers to Prime, which offers two-day shipping on many items available from Amazon as well as other benefits, by early 2017. Prime subscribers pay $99 a year (or $12.99 a month) for the service, and count as the company's most loyal and frequent customers. 

According to the documents, Amazon's U.S. audience for all video programming on Prime, including films and TV shows it licenses from other companies, was about 26 million customers. Amazon is believed to be spending about $5 billion a year on original and licensed video content. 

The company launched Amazon Studios in 2010, and since then original series and films such as "Transparent" and "The Big Sick" have received critical acclaim. According to Reuters, the internal documents compare metrics that have never been disclosed for the 19 "Prime Originals" TV shows, such as cost, viewership and the number of viewers they helped bring to Prime.

For example, the alternate history drama, The Man in the High Castle, was detailed as having cost $72 million to produce and having brought in 1.15 million new Prime subscribers, resulting in an acquisition cost of $63 per subscriber. Amazon calculated the number of new Prime subscribers its shows bring in by looking at the first piece of video content that new Prime subscribers watch after they sign up. 

GBH Insights analyst Daniel Ives said that video content "is the fuel in the e-commerce engine," allowing the company to broaden its consumer base and cross-sell its products. Ives estimates that Prime has 90 million subscribers and that its base will grow about 25 percent this year.

"The strategy is working even better than Bezos could have expected," Ives said. 

Amazon shares were down 0.4% to $1,584.29 in early trading on Thursday. Since the beginning of the year, the stock has risen more than 36%.

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