April 22, 2016
Amazon unveiled two new Prime plans on its website, introducing a video-only option for monthly subscribers. The new offering could ramp up the competition between its video service and Netflix. The first new plan costs $8.99 per month to stream TV shows and movies through a video-only version of Prime, while the second runs $10.99 per month for all Prime benefits, including video and music streaming, free two-day shipping on Amazon purchases, and more. Amazon hopes to reach consumers that have been reluctant to pay $99 up front for an annual Prime membership.
While the new monthly options would not save consumers money, they do bypass the hurdle of requiring an annual commitment to Prime. In the long run, it could interest new members in the annual subscription.
In addition, Amazon is highlighting a direct comparison to the monthly cost of its competitor in this space, Netflix, which dominates with more than 75 million worldwide subscribers. (Piper Jaffray estimates Prime subscribers to be in the 57 million to 61 million range).
“Customers who subscribe month-to-month for the full Prime service will pay $32.88 more a year than if they subscribe on an annual basis, while subscribers to the video service will pay $8.88 more a year while getting substantially fewer benefits, like free two-day shipping, than annual Prime members,” explains The New York Times.
“Amazon began to tinker with the pricing of its Prime service last month, when it introduced a new $10.99 monthly membership option for the full Prime service by allowing customers of Sprint to tack the Amazon service onto their monthly cellular bills.”
While Amazon joined streaming video later than Netflix, with relatively limited content, it has been growing its library in recent years, including recent licensing deals for popular series such as “Downton Abbey” and “Mr. Robot” — as well as continued investments in award-winning original programming like “Transparent” and “Mozart in the Jungle.”
Are Amazon’s Monthly Prime Subscriptions Worth It?, CBS News, 4/21/16
Amazon Ups the Ante on Streaming Video, Challenging Netflix, The Wall Street Journal, 4/18/16