Amazon's path to TV success takes cues from old school Hollywood - 10th January 2015

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Roy Price, Director of Amazon Studios, poses during Amazon's premiere screening of the TV series "Transparent" at the Ace Hotel in downtown Los Angeles, California, September 15, 2014. REUTERS/Kevork Djansezian

SAN FRANCISCO (Reuters) - Amazon prides itself on being a company that breaks the rules, but its recent success in Hollywood also reflects an embrace of a more traditional, old-fashioned script.

The largest U.S. online retailer, which has spent heavily on original programming and boosted the marketing for its shows, is up for two Golden Globe Awards this Sunday. Its Amazon Studios division, launched in 2010 with scepticism, is now starting to enjoy critical acclaim.

The plan is raising its profile in Hollywood and, critically, among would-be members of its $99-a-year Prime programme, which comes with two-day shipping on items sold on Amazon, streaming video and other perks.

Also, like big studios in Hollywood, Amazon has courted big-name screenwriters and producers, such as Jill Soloway, a writer and co-executive producer on HBO's "Six Feet Under." She also is the creator of "Transparent", the Golden Globe television series nominee starring Jeffrey Tambor as a divorced parent who comes out as transgender to his three adult children.

Amazon Studios, born as a rebel, promised to use its data-mining skills to birth mini-screen blockbusters, eschewing the longheld practices of Hollywood creative types.

But its shows struggled to find an audience early on. Few consumers knew the largest U.S. online retailer, best known for low prices and fast shipping, was in the TV business unlike Netflix, which promoted its shows like "House of Cards" heavily.

Since then, Amazon's marketing budget for original shows has expanded. In the fourth quarter, Amazon began promoting two of its original shows - "Transparent" and "Mozart in the Jungle" - with television ads and billboards, the more traditional marketing tools that it previously skipped.

The changes do not amount to a wholesale shift in strategy for a company that relies heavily on mining customer data to inform its development team of potential television hits or misses. But they illustrate how Amazon is refining its approach to original scripted content, which is increasingly important to attracting new members to its Prime membership programme.

“We have gotten better over time about being quick and responsive and big and having the campaign roll-out effectively around the world in the UK, U.S. and Germany, where Prime exists,” said Roy Price, head of Amazon Studios.

While the marketing campaigns are far from the full-page media spreads used by Netflix and Time Warner's HBO to promote shows, it has bought attention to Amazon’s fledgling foray into original content production, which is shown free to Prime members.

USING NEW, OLD HOLLYWOOD MODELS

Amazon Studios started by focusing on building a software system where people could submit and share scripts, which are reviewed by Amazon readers and story analysts. But after the technology was in place, Amazon began to court professional writers, producers and directors to work on original content, Price said, allowing Amazon to tap new and old models.

"As a practical matter, setting up the open system required some engineering and building, so we did that first. So once we launched that, we sort of set up the professional aspect as well," Price said.

The vast majority of Amazon's television pilots now come from experienced and well-known names in the industry.

The Golden Globe Awards nominations for “Transparent” for best TV comedy along with a best actor nod for Tambor are signs that the model is paying off. Another new Amazon show, “Mozart in the Jungle”, has also garnered strong reviews, landing on the New York Times’ list of Best Shows of 2014.

Amazon spent an estimated $2 billion on content in 2014 with about $200 million of that used to develop original shows, according to Wedbush Securities analysts. Amazon spent more than $100 million developing original video content in the third quarter.

As Amazon spends more on marketing, investors are concerned about its lack of profitability and skimpy disclosures regarding that spending. Analysts say it is unclear whether and when its efforts in original video content will bear fruit.

Amazon is hoping the investments will help draw and retain paying subscribers to its Prime programme. Prime members spend three times more on Amazon.com than other consumers, and they also spend more on Amazon over time, according to International Strategy and Investment Group analyst Greg Melich.

Garry Trudeau, the creator and executive producer of “Alpha House” and Pulitzer Prize-winning cartoonist known for his Doonesbury comic strip, said that Amazon was betting on the long term, financially. "As a commercial paradigm, it's obviously another world. Our prospects aren't linked to overnight ratings. As with everything else, Amazon takes the long view with programming," he said.