Cinemas stocks got a boost Wednesday after a report said Amazon plans to spend $1 billion a year on theatrical film releases.
The tech company plans to make between 12 and 15 movies for movie theaters each year, Bloomberg reported, citing people familiar with the matter. A smaller number of films will be produced in 2023 as Amazon builds up its output, the report said.
Amazon declined to comment.
Amazon has deepened its investments in original content over the years through its Prime Video streaming unit, as well as its movie and television studios. The company spent $13 billion on content for its video and music streaming services last year, up from $11 billion in 2020, as it looks to remain competitive in the crowded media landscape.
Earlier this year, the e-retailer bolstered its media ambitions when it acquired legendary movie maker MGM Studios for $8.45 billion.
Amazon founder and executive chairman Jeff Bezos has made no secret of his desire to expand the company’s media business, and he has long believed that it can help drive Prime subscriptions and additional purchases on its core e-commerce site.
Amazon has released movies in theaters in the past. It premiered the first two episodes of its Lord of the Rings series in cinemas for a limited window, and its 2017 comedy “The Big Sick” was shown in theaters. But the company has primarily launched its original content directly on the Prime Video service.
While a $1 billion annual investment for film development is on the lower end of what major Hollywood studios spend each year, its a positive sign for the movie theater business, which has struggled in the wake of the pandemic.
Audiences have returned to cinemas, but because the production pipeline was stalled in 2020 and 2021, fewer movies have been released in cinemas in 2022. Blockbuster films continue to drive significant, sometimes record breaking, domestic box office numbers, but without a steady slate of new content, the overall industry remains significantly below prepandemic levels.
There has been about one-third fewer wide releases — films that debut in more than 2,000 theaters — and that has meant that the overall box office is down about one-third as well compared to 2019.
“We certainly applaud content makers when they decide to spend on quality movies,” said Jeffrey Kaufman, chief content officer and senior vice president of film and marketing at Malco Theatres. “But to date, no streaming company has committed to a robust theatrical distribution model, including Amazon. We would love if any streamer would support the theatrical space with wide quality releases.”
Already, 2023 is expected to be a stronger year at the domestic box office, as production levels returned to normal in 2022, but Amazon’s additional film commitments gives the industry another confidence boost.
(With inputs from CNBC)