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Stand alone Prime to take on Netflix

April 18, 2016

By Colin Mann

Amazon is introducing new options to subscribe to its Prime membership service on a monthly basis, a change that could enable its video service compete more effectively with Netflix. The company now offers two new Prime price plans, the first of which costs customers $8.99 (€7.95) a month to stream movies and television shows from a new video-only version of its Prime service. A second new plan, priced at $10.99 a month, will provide access to the full benefits of the Prime service, including video streaming, free two-day shipping on Amazon orders, music streaming and other services.

A requirement for customers to pay $99 up front for an annual membership to Amazon Prime had been seen as a major hurdle for anyone thinking about joining the service. The new options do away with the need for an annual commitment to Prime, widening its appeal to people who are more comfortable joining it on a short-term basis. Broadening the monthly options for Prime to anyone and introducing a video-only service, makes it easier for people to compare the price of Prime to that of dominant subscription streaming provider Netflix. Netflix has long been available on a monthly basis, without an annual commitment, offering several plans ranging from $7.99 to $11.99 a month, depending on video quality and the number of screens to which customers can stream video at the same time.

“As we predicted, Amazon has finally unveiled a standalone online video service; putting them in the same category of most, if not all of its rivals that already offer video as a separate service,” notes Paolo Pescatore, director, multiplay and media at CCS Insight.

“This significant move underlines the company’s commitment to video and we firmly believe that the next step is to launch the new service overseas. Its closest rival, Netflix, has done a phenomenal job of launching in many new markets within a short period of time and as a result, has a far greater reach and can benefit more from scale and of course early mover advantage.”

“Offering video as part of Prime was holding Amazon back from launching into new markets, as there was little to choose from in terms of price. It therefore boils down to content and new features such as UHD 4K, HDR, offline viewing and much more,” he suggests.

“In addition, this could present a great opportunity for Amazon to sign up new subscribers and eventually cross sell other services to them including a Prime subscription. 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! All eyes are now firmly on Netflix when it reports earnings later today for 1Q16.”

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