The Amazing Rise of Amazon Studios

When the 89th Academy Awards celebration begins on February 26, Roy Price is sure to be in the audience. If early predictions are accurate, he will be anticipating an award or two for Manchester by the Sea, a film thats been the smash hit at all four major North American film festivals this season.

A huge comeback for writer/director Kenneth Lonergan, Manchester by the Sea stars Casey Affleck as a lost soul forced to contemplate adopting his reluctant teenage nephew. With Manchester receiving six Academy Award nominations, Roy Price could be a happy man on Oscar night. And Amazon.com shareholders, who have seen Amazons stock price rise 340 percent in the past six years, would likely be giving a standing ovation.

Price, 49, who until recently lived in Seattles Laurelhurst neighborhood, is chief of Amazon Studios the arm of the Jeff Bezos empire committed to revolutionizing entertainment. Based partly in Seattle but mostly in a new 85,000-square-foot Santa Monica production facility, Prices team of renowned Hollywood execs and industry veterans has been responsible for more than 100 prestige movies and blockbuster shows. They now make and acquire original films and TV series, which are streamed via the companys on-demand video service.

Amazon is likely second only to Netflix in total streaming customers. And Manchester by the Sea is its first big Oscar contender. Even if Oscar snubs Amazon, its Hollywood profile is at an all-time high. Back in 1998, when Amazon began selling DVDs, Hollywood studios actually refused to make DVDs of their films available for sale online. Now, Hollywood returns Amazons calls, and Price can hire talent like directors Woody Allen, Steven Soderbergh and Spike Lee, and Manchester producer Matt Damon.

Its a coup for Price, who started planning this Hollywood invasion in 2000, when he quit Disney after six years as animated-series VP to become a digital media consultant. He then joined Amazon in 2004, launching its video-on-demand service in 2008. When archrival Netflix started making its own shows, like the popular and critically acclaimed House of Cards, Price got the green light to launch Amazon Studios in 2010.

Netflix spends about $6 billion a year on 1,000-plus hours of original programming. Amazons production is ramping up sharply in the second half of this year it said it was spending twice as much as in the same period last year but its attitude toward releasing actual numbers on its business is a lot like the secretary who defies Javier Bardems nosy killer character in No Country for Old Men: Did you not hear me? We cant give out no information!

Regardless, Price is happily gobsmacked at how fast Amazon Studios has taken off. Our first show, Garry Trudeaus Alpha House, came out three years ago, says Price, who has a mind sharp as a bear trap and a jaunty, quirky personal manner.

Alpha House earned some applause, though no Emmys something that changed in Amazon Studios second year, when it nabbed five Emmy Awards to Netflixs four. Amazons first hits Transparent, a noble, exquisitely trendy comedy-drama about a transsexual dad, and Mozart in the Jungle, about a madcap orchestra conductor (Gael Garcia Bernal) and a young oboist (Lola Kirke) won four Golden Globes in the past two years, plus an abundance of the industrys most prestigious other prizes.

Price plays everything close to the vest, but these days he doesnt conceal his glee. In his first time at bat in the Oscar race, he has hit what could be a home run with Manchester by the Sea.

We only came out with one movie last year, Price remarks. Well have 15 this year.

And while he is all smiles about Amazons entry into the movie world, his ambitions for TV are just as energetic. He spent a reported $70 million for an eight-episode series from Mad Men creator Matt Weiner and $160 million for 16 episodes of a David O. Russell drama starring Robert De Niro and Julianne Moore.

Amazon hasnt said yet when the programs will air.

Amazons successes are catching the attention of media watchers.

As soon as Amazon entered the awards race, that scrappy media player zoomed to the front of the pack, says Tom ONeil, editor of the Gold Derby awards-prediction website. Transparent won Best Comedy Actor for Jeffrey Tambor at the Emmy Awards in 2015, the first time a streaming service won a top Emmy category. Amazon not only proved it was a serious player, but its playing for the long haul ahead.

In 2008, Amazons digital video sales generated revenues comparable to that of a neighborhood Blockbuster store. How on Earth did Roy Price turn this modest digital store into a rocket ship to Emmy and Oscar acclaim?

It helps that he is Hollywood royalty. Prices mom, Katherine Crawford, was an actress who appeared on the 1970s Seattle-set show Here Come the Brides. His dad, Frank Price, ran Columbia and Universal studios, and his namesake maternal grandpa, Roy Huggins, created and produced breakthrough TV shows like The Fugitive, The Rockford Files and Maverick.

Perpetually clad in jeans and a black leather jacket, Price can swim with Hollywood sharks, speak their upbeat lingo and still talk digital business jargon with the nerdiest of nerds. His parents tried to steer him away from too much show biz, but after graduating from exclusive East Coast schools (Phillips Academy Andover and Harvard University), he went to USCs Gould School of Law, worked as an assistant for an agent who grew up to run Hollywoods top talent agency, CAA, and went into the family business.

He is irreverent, puckish and infinitely bolder than most Hollywood execs, who live in fear of making a mistake and getting fired. Price takes entertainment seriously he actually rewrote the story of Bosch, Amazons adaptation of the Michael Connelly crime novels, but he isnt self-important. The Disney film The Barefoot Executive, about a chimpanzee thats adept at picking TV hits, is one of his favorites.

That is an awesome, awesome movie, says Price, who loves monkeying with Hollywood tradition. Youre not going to find the most interesting new show on TV by being easily put off by risk. You have to be sort of bold. In todays competitive environment, the conservative path is the riskiest path.

Price doesnt seem to need a chimp to pick hits. Like his forebears, he is a maverick with an analytical streak. His grandpas show, The Fugitive, which became a $387 million movie, broke all the rules of its day. Every network passed on The Fugitive at least once, he says. You couldnt have a guy wanted for murder as your protagonist! The whole concept was offensive! But it was a huge hit, and the offbeat protagonist has become very popular.

Offbeat protagonists are the foundation of Prices empire: trans dads, madcap maestros, Nazis running half of America in Philip K. Dicks The Man in the High Castle, and a Vietnam-era writer who sells out his talent in Woody Allens Crisis in Six Scenes. As with The Fugitive, he notes, Every studio passed on Transparent.

Price also doesnt fret about industry headlines, which note that shows by Netflix, FX, HBO and Hulu often get more viewers than Amazon. Though hes in competition with traditional studios for viewers in theaters, on TV and on devices, hes in a different position because Amazons business model is unique. He needs to grow viewership, but he doesnt make money from ads whose prices are based on viewership ratings, which (natch!) Amazon wont disclose.

Instead, he must grow membership in Amazon Prime, a service that costs Amazon customers $99 a year (or $10.99 a month), for which they get free two-day shipping on products purchased through Amazon and streaming of all the Amazon shows they can watch. Analysts say Price drove much of Amazons 53 percent growth in Prime membership in 2015 to an estimated 54 million (its now over 60 million). Prime members effectively subsidize all the shows Price is busy creating, whether or not they watch anything.

Their strong belief is the more time you spend in the Amazon ecosystem, the more money you spend with Amazon, media analyst Richard Greenfield told The Los Angeles Times last year. The key for Amazon is how do they get you to spend more time in that ecosystem and its with having a deep catalog of movies, TV and music.

Much more important than ratings, then, is converting casual customers into Amazon Prime members who buy three times as much from Amazon as non-Prime customers and breaking through the noise of the vast landscape of entertainment options.

Youve got to make it interesting and worthwhile and buzzworthy to stand out in a crowded market, says Price. What youre really looking for is that really ambitious, completely addictive, binge-worthy show thats in the top 20 or 10 or one that people are talking about. In 1977, you could get a lot out of a show that simply retained the audience of a previous show. But today, its on demand they have to demand it. So youve got to earn that.

Audience habits are changing at warp speed, something Price and his boss, Bezos, who devotes serious time to Amazon Studios, are obviously factoring into their plans. Most Hollywood programmers live or die by ratings and first-weekend grosses. Bezos and Price play a longer game. Their goal is to retain audiences for years, not weekends, and they have the benefit of the worlds largest database of consumer behavior.

Instead of relying on Nielsen polls of viewers, who can lie about what they watch and are increasingly hard to reach as people ditch their land lines, Amazon and its tech rivals can tell exactly what its customers are watching, and algorithms tell an informative story about particular products they might like. Netflix mined data showing its customers loved the original British House of Cards and Kevin Spacey before shelling out $100 million for the United States version, but Amazon has even more customers and data (just not more streaming customersyet). These tech game changers are making Hollywood nimbler, less irrationally traditional, more customer-driven. Cable companies give you mostly channels you dont want; Amazon, ever more cleverly, gives you what you do want.

The key question is whether the ability of Amazon and Netflix to observe individual customer behavior gives them an advantage over broadcasters Nielsen survey data, says Michael D. Smith, a Carnegie-Mellon University information tech and marketing expert, and so far, the answer seems to be yes. As Amazon and Netflix emerge as competitors, it will be interesting to see whether Amazons ability to observe both retail purchase data and video views gives it an advantage over Netflixs video-only data and the jury is still out on that one.

Theres also no telling what else Bezos will take over. But its worth remembering that the bestselling bio about him is called The Everything Store and his original name for Amazon was Relentless.com.

An Oscar could provide an altogether different type of boost in visibility. Guests at Decembers Manchester by the Sea Oscar campaign bash say Price and Bezoss hunger for the gold doll was absolutely palpable. Yet many maybe most people have no idea Amazon is in the movie and TV business. So if a $2 million Oscar campaign can catch the eye of 300 Academy voters, it could produce recognition for a movie that might then be watched by one billion people.

Even for the famously frugal Bezos, whose Amazon executives fly coach, that kind of return is definitely worth a $2 million investment.