Amazon is out to intensify the competition in the world of video streaming services, by tweaking the pricing model for its offers. So if you opt for this, you’ll be paying $8.88 more per year than if you got the full Prime yearly membership with all its added benefits, but this isn’t targeted at the same user who’d need a Prime account.
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Amazon, for instance, simply changed the way it prices Prime video; but it will have to actually follow-up and execute in a way that negatively affects Netflix – a challenge likely easier in theory than in reality. Jay Marine, vice president of Amazon Instant Video in Europe, told CNBC past year that the company would “double down” on its investment in video and audio content, after spending $1.3 billion on Prime Instant Video in 2014. Previously, the only way to watch Prime videos was to pay $99 a year for Prime membership, which includes free two-day shipping on items sold by the site.
The company’s decision to offer a video-only version of Prime reflects a growing confidence at the company in the quality of the service.
Hulu’s plan that offers no commercials costs $11.99. “Amazon is certainly building a strong set of capabilities in both hardware and services to compete with Netflix and others, and we say let the battle commence!” This puts Amazon in the same boat as other popular video streaming services such as Hulu and Netflix, a service which has recently announced a price increase by one dollar to $9.99 a month.
Amazon boxes are seen stacked for delivery in the Manhattan borough of New York City, January 29, 2016.
Michael Pachter, an analyst at Wedbush Securities Inc., said the stand-alone video service costs too much to convert many Netflix subscribers, but Amazon could split the remaining US market with Netflix as more consumers embrace video streaming. The stock fell about 2.8% during the trading day and declined about another 8% in after-market hours when the streaming-video giant reported first-quarter results.
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When Amazon Prime started, it was just a simple shipping option for Amazon customers. At $8.99, it’s just a little bit cheaper than the current price of a lot of video streaming services.
