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Amazon to Produce 5 Kids Shows

Zacks Equity Research

Amazon.com Inc. (AMZN) announced that its film production division, Amazon Studios plans to produce pilots for 5 more original children shows in an effort to make its Prime Instant video service more attractive to its customers.

These include Gortimer Gibbon’s Life on Normal Street, a live-action adventure show, Grid Smasher, Hard-Boiled Eggheads, an animated action-comedy for the age group of 6-11, The Jo B. & G. Raff Show and an animated series, Wishenpoof!.

Management stated that all 5 pilots will be available on the Amazon Instant Video streaming service where viewers can watch them free of cost. Amazon Studios will take a call on which shows to produce going forward depending on viewer feedback.

Amazon Instant Video is a digital video streaming and download service that lets users rent, buy or subscribe to a range of video content. These pilots will further extend the archive of children shows on Amazon's video streaming library, making it a significant force in the video streaming segment and increasing competition for Netflix Inc (NFLX) and Apple Inc. (AAPL).

The completed pilots will be exclusively available to Prime members through Prime Instant Video and Lovefilm in the UK for no additional cost. Lovefilm is Amazon’s European DVD and streaming movie service, which has almost 2 million subscribers.

Recently, in June, Amazon had announced its decision to produce 5 original TV series from a group of 14 pilots that were earlier produced by its film production division, Amazon Studios. These 5 TV series, which include 2 comedy series and 3 children shows, will be available on the Amazon Instant Video streaming service later this year and in early 2014.

In fact, many technology companies are getting into content production, including Hulu and Netflix, to reduce their reliance on traditional media companies. Amazon has been working on this for a while now and we believe these efforts will bring in millions of dollars and help the company to increase its market share.

Amazon is one of the leading players in an extremely fast-growing market. In the second quarter, Amazon’s top and bottom lines missed our expectations. The company is making huge investments in fulfillment and technology & content, which might continue to impact the company’s bottom line going forward.

Currently, Amazon shares retain a Zacks Rank #5 (Strong Sell).

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