Rapid TV News - Analysis
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Major business

Rovi to acquire TiVo for $1.1BN

After weeks of speculation, investors learned this week of Rovi Corp’s plans to acquire TiVo for about $1.1 billion.

Video drives surging Facebook

In stark contrast to stuttering Silicon Valley peers such as Apple and Twitter, social media giant Facebook has posted strong financial results given a spur by expansion into video.

Francisco Partners helps fund SintecMedia management buyout

The management team of SintecMedia has teamed with private equity firm Francisco Partners to acquire the broadcast management software provider from its existing shareholders including Riverwood Capital.

Media Analysis

SVOD leads home viewing changes

Netflix is found in 45% of Local People Meter (LPM) TV homes, according to Nielsen, with nearly a quarter of US households now having access to smart TVs.

Streaming sources boost broadcast TV viewership

Streaming back-seasons has been found to have a positive impact on current broadcast TV shows, says research from Symphony Advanced Media.

Increased content demand to drive 4K STB revs way up

Increasing demand for Ultra HD content and surging sales of compatible 4K TVs and display devices will send the global 4K set-top box (STB) market up to reach $3.65 billion by 2024.

Media Investment

Amazon eyes Prime investments as Q1 earnings rock Wall Street

Amazon is planning to "significantly" increase its spending in video content going forward.

Alphabet’s Google misses profit targets, but YouTube a bright spot

Google parent company Alphabet missed analyst projections for the first quarter of 2016, but YouTube continues to be a bright spot.

AOMedia Video codec goes open source to take on HEVC

The Alliance for Open Media has announced public availability of its AOMedia Video source code, in a shot across the bow at HEVC.

Amazon eyes Prime investments as Q1 earnings rock Wall Street

Michelle Clancy
Amazon is planning to "significantly" increase its spending in video content going forward.

primeeAfter the company blew away Wall Street expectations this week for its quarterly earnings, Amazon CFO Brian Olsavsky said that Prime members who use the video service have better engagement and conversions, and that this will drive future investments in video going forward.

"One of the larger investments is our content spend... We like the results because we see better engagements, better free trial conversions from Prime members who use the video service," Olsavsky said. "We're going to significantly increase our content spend, some of it is in Q2 guidance, but we'll be expecting more of it in the back end of the year certainly."

Amazon stock meanwhile soared more than 12% in after-market trading as the company posted first-quarter financial results that easily beat analyst expectations. It means that Amazon is valued at about $317 billion, up about $35 billion from Thursday’s close.

Amazon recorded a profit of $1.07 per share in the quarter on revenue $29.1 billion, which was a 29% increase over the same period last year. Analysts had estimated a profit of 58 cents a share on about $28 billion in revenue.

Even better, the quarterly results mark the first time since 2012 that Amazon has turned a profit in four straight quarters. “It’s all just working,” JP Morgan analysts wrote in a research note.

Goldman Sachs analysts added, “We believe these results are further evidence that Amazon’s investment in infrastructure, logistics, and web services is accelerating market share gains, cash flow growth and continued high returns on invested capital.”

By all accounts, the Prime video streaming service – of which Amazon recently launched a standalone version divorced from its free shipping program – will be a big growth engine for the future.

“On the retail side, Prime is the driver,” wrote Macquarie Research analyst Ben Schachter, who raised his target to $760 from $725 per share, while maintaining an “outperform” rating.

He wasn’t alone. “In both North America and International, Prime continues to thrive and we believe continued investment in original content, expansion in existing markets and the still-large opportunity to add new markets offers lots of runway,” BMO Capital Markets analysts Daniel Salmon and William Lowden wrote. BMO raised its price target to $800 from $700, and also maintained its “outperform” rating.

The gravy train may not be so easy to maintain going forward. Amazon shares have gained an impressive 40% in the past year, meaning that earnings per share will have to grow at a compound annual growth rate of 90% over the next five years in order to justify the stock price. Overall, shares are trading at 98.7 times forward earnings, according to StarMine. To put that in context, Apple trades at 10.8 times earnings, while Alphabet trades at 19.9 times.