$AMZN plans to spend $1 billion annually on the creation of movies that will be released in movie theaters. That's 12-15 movies a year.

Jeff Bezos, the former CEO of Amazon, wanted to use Prime Video as a way to boost Prime subscriptions and even boost the platform's e-commerce sales. While I think that the market for Prime subscriptions has saturated, Prime Video can surely help drive e-commerce sales by introducing products and services within their shows and movies that can inspire people to buy certain things (like how Netflix's The Queen's Gambit helped drive a surge in chess sets).

The great thing about these streaming companies releasing movies in theaters is that the huge profits that come from theatrical releases help these firms remain profitable despite the cash burn that comes with being a streaming provider. $PARA is one example where the profits from theatrical releases have helped the company maintain profitability despite the cash burn that came with Paramount+.

Ads are the key to profitability for streaming platforms. Without ads, it will be very difficult for streaming companies to break even on all the content spending as well as spending that comes with operating a streaming service. Look at Youtube, it's a video streaming service that is entirely reliant on ads. They've been able to become insanely profitable thanks to ads. Their revenues correlate with content consumption by users. Streaming companies that only provide a monthly fee and unlimited access to their platform are only making money from the monthly fee and don't receive more money whether the user binge-watches shows or not.

They're missing out on a massive profit opportunity.

While the move in implementing ads onto streaming services will take time, Prime Video is resorting to theatrical releases to generate profits.

Maybe the move to theatrical releases will help Amazon move the needle.