Amazon Invests $75 Million in Prime Video Content for India -- Is It Money Well Spent?

By Harsh Chauhan Markets Fool.com

India's online video streaming market is going to be big, and Amazon (NASDAQ: AMZN) does not want to miss the gravy train. The e-commerce giant is going all out to bring the best content to its Prime Video platform and has reportedly invested $75 million in original shows aimed at the Indian masses.

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It goes without saying that Amazon's focus on delivering India-focused content is going to play a big role in helping the company tap the potential of online video streaming in the country. This is why it has spent a fourth of its $300 million Prime Video budget for India on creating local content by partnering with production houses and digital content creators.

Image source: Getty Images.

Amazon is spending in the right areas

Amazon has signed up 15 production houses, including an army of stand-up comics, to create original content for the market. Two of these production houses are very well-known and could drive a lot of traffic to the service -- Excel Entertainment and AIB.

Image source: Amazon.

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AIB is a satirical comedy group popular on YouTube. In fact, AIB has one of the most popular YouTube channels in India with over two million subscribers and 206 million views generated through the production of just over a 100 videos. They are now said to be producing a political satire show for Prime Video starring a famous face -- Irrfan Khan (of Jurassic World fame).

This is just one of the 18 original shows that Amazon has planned for the region. In all, Amazon reportedly has nine of its India-centric shows already in production.

More importantly, Amazon is focused on bringing star power to its original content. This is why it has partnered with Excel Entertainment, in which Indian actor, director, and producer Farhan Akhtar is a stakeholder. The company has reportedly paid Excel Entertainment around $6 million (INR 40 crores) for its first India original, which is expected to be released by the end of March or in early April. The showis reportedly based on the themes of cricket and showbiz, with the former being India's most beloved sport.Also on tap is a crime drama for the Indian market that is loosely based on Netflix'sNarcos.Crime dramas are one of the most watched genres on Indian television

As it turns out, Netflix is already producing its first original show for India -- Sacred Games. This thriller focuses on criminal dealings in Mumbai, and it appears Netflix is taking a safe approach and offering what viewers in the country already like.Not to be outdone, Amazon is looking to one-up Netflix by offering a variety of content, including satire, comedy, and crime dramas. As more Amazon shows air, Prime Video will be more apppealing to Indian audiences.

Cricket could be a big deal for Prime Video

However, one missing link in Amazon's offerings is the lack of live sports coverage, where it is currentlybehindthe Hotstar streaming app -- part of theTwenty-First Century Foxumbrella.Hotstar is now the most popular video streaming app in the country, boosted by popular sporting events like Indian Premier League (IPL) cricket. In 2016, an estimated 100 million people watched IPL on the Hotstar platform out of a total one billion viewers.

Coverage of this cricketing event will play a key role in driving adoption of Amazon's Prime Video platform in India. This is why the company is bidding for the digital media rights to broadcast IPL content, though results of the bidding process are not yet available.In 2015, the rights were sold for about $47 million at the current exchange rate for a period of three years. The agreement expires in 2017, and the new bidder will hold the rights from 2018 to 2022.

With $300 million to invest in the region, Amazon could allocate a greater portion of its budget to winning the IPL digital rights, instantly giving the company a huge viewer base for the next four years.

The takeaway

Amazon's financial muscle should help Prime Video build a compelling library of content for India, and the company will also compete as the cheapestservice compared to offerings from Netflix and Hotstar.With online video subscriptions in India forecast to exceed 100 million by 2020, up from just 12 million in 2014, the company's investments in the country should indeed be money well spent.

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Harsh Chauhan has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Netflix. The Motley Fool has a disclosure policy.