The ‘Hidden Value’ of Amazon’s Media Business
Amazon’s media businesses today are worth about $500 billion, or 38% of the internet giant’s total value, according to new analysis from Needham. Analyst Laura Martin, who initiated coverage of the stock Wednesday with a $3,200 price target, says Amazon’s media assets are 90% as valuable as AWS, “but these revenue streams are somewhat ‘hidden’ since AMZN doesn’t break out their revenue or operating income.”
Amazon’s media portfolio includes: Prime Video, Twitch, Amazon Studios, Amazon Music, Audible, and Amazon Publishing.
The value of Twitch: “Twitch is the most undervalued asset inside AMZN’s empire because it extends AMZN’s reach into the next generation of purchasers,” according to Martin. The analyst estimates that Twitch will generate about $2.5 billion of revenue in 2020, up 67% from 2019.
Twitch fast facts: Twitch viewers watch 95 minutes per day, on average; Unique monthly users were 140 million, unique daily viewers were 15 million, and 3.8 million streamers aired on Twitch during February 2020, according to Twitch Tracker.
Premier League coming to Twitch for first time: Amazon is using the most popular league in the world’s most popular sport to bring more consumers into its ecosystem. Amazon announced Thursday that four additional Premier League games this season will be available to stream for free in the UK on Twitch, the tech giant’s video game streaming platform. Needham analyst Laura Martin says Amazon licensing and streaming traditional sports to its Twitch audience should drive higher ad revenues and complement Amazon’s Prime Video offering.
Twitch’s other sports partnerships include: North America’s National Women’s Soccer League (NWSL) and Australia’s National Basketball League (NBL). In Sept 2019, the National Women's Hockey League announced a three-year broadcast rights deal with Twitch. Perhaps most importantly, Amazon and the NFL recently agreed to renew their streaming partnership for Thursday night games.
Big picture: Amazon’s media assets, including sports, are an important part of the company’s strategy to keep consumers in the Amazon Bubble. Needham notes that although “80% of Prime members say they subscribe to Prime primarily for free shipping, 20% say the primary reason they pay for Prime is for AMZN’s media-related content assets.”
