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Amazon Prime members still need their Netflix

April 8, 2015 05:35 PM
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Tens of millions of consumers have joined Amazon.com Inc.’s Prime program, gaining access not only to two-day shipping but free streamed video and other perks. But that doesn’t mean they have stopped throwing serious kisses to Netflix Inc.

That’s the finding from a survey by market research firm Strategy Analytics, which in a report released Wednesday finds that 63% of Amazon Prime subscribers had streamed video from Netflix in the previous month compared with 59% who streamed content offered through Prime Instant Video. 23% of consumers report using Prime Instant Video and Netflix.

Consumers who pay $99 a year for Prime, or who take free trial memberships, receive access to thousands of movies and TV episodes through Prime Instant Video, access to streaming music with Prime Music, early access to some limited-time offers and free book downloads for Kindle owners, among other perks. Netflix plans start at $7.99 per month, or $95.88 annually.

Amazon does not say how much it spends on Prime. But in releasing Amazon’s fourth-quarter earnings report, CEO Jeff Bezos said, “In 2014 alone we paid billions of dollars for Prime shipping and invested $1.3 billion in Prime Instant Video.” Neither Amazon, No. 1 in the Internet Retailer 2014 Top 500 Guide—the 2015 edition is due next week—nor Netflix, No. 7, immediately responded to requests for comment. An estimate earlier this year from investment firm Macquarie says half of U.S. households could be members of Amazon Prime by 2020. Macquarie estimates 20% to 25% of U.S. households, or 40 million, include a Prime member. Macquarie also says in the fourth quarter of 2014 that 10 million consumers signed up for Prime.

Strategy Analytics, meanwhile, bases it findings on an online survey conducted in the fourth quarter of 2014 of some 5,000 consumers age 18 to 74 in the United States, Germany and France. “Amazon is needlessly losing users to Netflix when, in fact, it should be eating into their user base,” says Leika Kawasaki, Strategy Analytics’ digital media analyst. “Amazon Prime offers subscribers multiple benefits, there are more Amazon-capable devices and the subscription is slightly cheaper. Yes, Prime Instant Video has been lagging behind Netflix in original programming, but it’s been making significant moves to address this recently.”  

The report also finds that:

• 44% of Amazon Prime users in the United States use Instant Video at least once a week. That compares to 55% in Germany and 54% in the United Kingdom.

• Consumers who own Amazon Kindle or Fire TV devices are 10% more likely to use Instant Video “regularly.”

• Among U.S. consumers who do not belong to Prime, 12% are “somewhat likely” to subscribe by the end of the year while 4% are “very likely.” For those who don’t plan on subscribing, 53% cited Prime’s “high price” as the reason. 

 

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