Amazon Indian eCommerce + Video/Music Content attract Investments

amazon-india-investmentsAmazon is accelerating its investment in its retail operations in India. For one, two years after committing $2bn, this Mr. Bezos announced that he was committing an additional $3bn in India. We believe this was likely due not only to the success that Amazon has been seeing and the significant opportunity that it still sees ahead, but may also have been due to the need to continue to investment its logistics in order to address infrastructure issues in India, to take advantage of potential challenges at local competitor Flipkart, and to address new regulations taking hold in India.

The Executive Management’s commentary on the 2Q16 earnings call that it plans to double video content investment in 2H16 likely points to acceleration in spend this year vs. 2015. Moreover, unlike Netflix and most other media companies, Amazon immediately expenses the majority of its spend on original video content when incurred, and the company is nearly tripling the number of new Amazon Originals in 2Q16 (versus 2H15). While the company does not provide much detail on its level of spend (only reporting that it spent $1.3bn in 2014), we estimate that total video content spend this year might be in the $3bn range, which could represent about $1bn in incremental spend y/y (or 60-70%+ y/y) as compared with $600- 700mn in incremental spend in 2015 (or 50% y/y).

In the eCommerce space, Amazon has established international market the “International Big 3” (Germany, the UK and Japan) and the “International ROW” (e.g., India, China, Italy, Spain, etc.)

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