Amazon’s corporate culture could hurt its streaming business

With a company as big and prosperous as Amazon, it has more than enough resources to take out its competitors in the streaming industry – but why not? Prime Video has the adaptations of several major franchises such as Jack Ryan by Tom Clancy, The Boys, The Lord of the Rings: The Rings of Powerand the coming precipitation, but the technological foundation on which Amazon is built appears to be a problem for its streaming business.

As detailed in this piece of The Hollywood Reporter, some of the excitement behind the scenes at Prime Video stems from Amazon’s Big Tech culture. Amazon is notorious for treating employees like cogs in the larger corporate machine, and that doesn’t exactly sit well with Hollywood’s talent-obsessed ways.

Some examples of cultural clashes between the two worlds are funny – insiders talking to Kim Masters sound a little spoiled while complaining about seating plans and compensation structure. While this may seem insignificant, it’s still a problem. Regardless of who is to blame (many of the sources in The Hollywood Reporter‘s piece references Prime Video head Jennifer Salke), things aren’t going as well as they could in Amazon’s streaming business.

Amazon caps base salary for employees at $350,000 with stock options. That’s not how compensation is treated in Hollywood or even most other major streaming companies. For example, employees at Netflix can choose how much of their compensation they want to stock versus base salary. Because Amazon’s compensation structure is so different, the insiders spoke The Hollywood Reporter suggested that many Amazon Prime executives were simply “taking their time to get as much stock as possible [to vest] as they can.”

Amazon has also apparently extended its agile seat arrangement to its entertainment arm. This means that only the top executives get their own offices, while the rest of the employees store their personal items in not-so-glamorous lockers and do their jobs in unassigned cubicles. That doesn’t seem to translate well to the world of Hollywood, where a good office for receiving talent and taking calls is as much a sign of status as it is important to the job. “It just adds to the sense of anonymity — that no one knows where their own spaces and belongings are,” The Hollywood Reportersays the source.

But it’s not just the lack of corner offices and massive pay packages that streaming execs at Amazon are grumbling. There are also the standards. Technology-based streamers tend to let stats dictate decisions, while Hollywood-based streamers are sometimes more willing to bet big on gut feelings. A good example of this is Amazon’s foray into live sports with its Thursday Night Football games. Amazon did very, very well on this deal, spending $1 billion a year and netting a record number of Prime subscribers as a result during its debut broadcast.

That’s great, but it’s led the bosses of all those people who are hired to find and make TV shows and movies to wonder why they need to spend money on potential big wins, when spending money on exclusive sports has brought in more subscribers. As noted by The Hollywood ReporterPrime Video insiders say the success has changed the way the company views live TV and film when it comes to retaining and retaining Prime subscribers.

And when you look at how much Amazon has spent on scripted content versus sports, you can almost see where those execs are coming from. In February, Amazon touted drawing 100 million viewers to the first season of The Lord of the Rings: The Rings of Powerthat is most expensive show in the world, costs a whopping $450 million (or closer to $700 million if you include the $250 million Amazon paid for the rights to Lord of the Rings). However, only 37 percent of users in the US have viewed itThe Hollywood reporter notes, which do not meet expectations.

Other similarly expensive projects have produced similar results – if they went anywhere at all. For example, The Hollywood Reporter states that Amazon spent $8 million on a two-year deal with Lena Waithe, who eventually left for HBO Max. It also renewed a $20 million a year deal with Phoebe Waller-Bridge after she left the Mr. and Mrs. Smith project she worked on. Waller-Bridge is now writing Amazon’s Tomb Raider amendment.

Amazon spent a total of $16.6 billion on video and music last year, according to the company’s earnings report. $7 billion, of which Amazon CFO Brian Olsavsky says was spent on “Amazon originals, live sports, and third-party licensed video content included with Prime.” The company spent half as much as its biggest rival, Netflix hovered around $16.84 billion last year.

But it seems Amazon’s $7 billion bill hasn’t done much to move the needle in terms of subscriber count. Instead of just maintaining a streaming service that produces solid — but not outstanding — content, Amazon may need to come up with its own Hollywood aspirations before spending another $7 billion making fine content.