Amazon might still be synonymous with e-commerce in a lot of people’s minds, but the trillion-dollar corporate giant has stealthily become one of the most valuable media companies in the world.
Findings published by equity research team at Needham & Co. have discovered that if Amazon’s media properties such as Prime, Twitch, and Music were broken into a separate media business, it would be valued at more than $500 billion.
According to MediaPost, the analysis includes a hidden-value multiplier calculated by Needham at 1.5 Amazon’s current enterprise value. That brings the company’s total media value to $500.200 billion, or 38% of its present enterprise value. (For comparison, Netflix’s current market capitalization is $200 billion.)
“Amazon has several important hidden asset values, especially in the media space,” writes Needham analyst Laura Martin, “Although we are most excited about advertising as a revenue diversification tool and upside profit driver for Amazon, Twitch is the most undervalued asset inside Amazon’s empire (our view) because it extends Amazon’s reach into the next generation of purchasers. Similarly, Amazon Music also extends Amazon’s demo reach inside the home.”
Martin describes Amazon’s strategy as “land and expand.” It enters consumers’ homes through e-commerce, but then branches out, catering to multiple demographics, which is part of its success. Twitch, for example, is popular among the gaming community—which largely spans Gen Z and Millennials—and with esports emerging as a billion-dollar industry on its own, Amazon’s Trojan Horse strategy continues to be effective.