Netflix (NASDAQ: NFLX) will need to watch Amazon (NASDAQ: AMZN) closely in the weeks to follow as the ecommerce and technology behemoth is poised to take the video streaming company head on with its latest plans for Prime.
Amazon targets short term subscribers
Amazon has had its Prime video service on offer for a while now, but the team at Netflix may not have had too much cause for concern - until now. While Amazon Prime had been too expensive for many with its upfront annual membership price tag of USD 99; in its new monthly subscription avatar, things may play out quite differently. By making a monthly option available, the trial by new users and those not willing to lock into an annual plan, is expected to rise.
The monthly concept had been tested on Sprint mobile users where a monthly USD 10.99 subscription to Prime was available to add on to their regular phone bills. Netflix by comparison, offers its 75 million subscribers plans that cost anywhere between USD 7.99 and USD 11.99 each month. Amazon Prime meanwhile, had an estimated 57 to 61 million Prime subscribers before the launch of this latest subscription plan.
Prime monthly subscriptions on offer in two-tier system
In an announcement made over the weekend, Amazon says that it will make available two different pricing plans for Prime. One option at a very affordable USD 8.99 per month will allow users to stream TV shows and movies through the video-only Prime. The other slightly higher priced service offers enhanced access, enabling subscribers to tap into all Prime benefits including the coveted free two day shipping on orders placed on the retailer’s website. At USD 10.99 with video streaming, music streaming, free two-day shipping and more, Amazon is driving a hard bargain.
The monthly option however, does come at a price; USD 32.88 to be precise. This is the amount that these users of the higher tier Prime monthly service will end up paying over the annual subscription rate over the course of a year. Those opting for the pared down video only subscription will pay just USD 8.88 more than an annual subscriber, but this comes minus the added benefits of music and free two-day shipping.
Many believe this move comes as a result of Amazon’s faith in its video service quality, leading them to take the bold step of launching a video-only subscription option, a departure from its previous strategy of leaning on its retail strength through the complete Amazon Prime package that blended a mix of services. While Amazon may have been late to the game compared to Netflix, the current focus coupled with the significant additions and improvements to the catalog might mean they gain ground quickly.