Amazon is offering better pricing to its online video subscribers
At this point things tension has escalated a lot between Netflix Inc. and Amazon.com Inc. The latter is now competing with the streaming giant by coming up with Prime Video. The company wishes to beseech the business of Amazon and wishes to become the platform for online video streaming.
Late Saturday, a press release surfaced by the company which announced the debut of a video streaming platform. Initially this service was part and parcel of the Amazon Prime membership but now it will function as a standalone application. This service will be offered free of cost to all prime subscribers along with other freebies they get as perks for the annual membership. Some of the advantages of Prime are access to free music libraries, vast catalog of films and TV series, shipping in two days etc. So far the company has priced the service at $99.
At this point AMZN is going head on against Netflix, online streaming giant. Thus the monthly subscription charges for the Prime Video service are said to be $8.99 per month. This is $1 less than the price offered by Netflix to its subscribers for monthly subscriptions. This seems to be a well thought out strategy by the company to eat up Netflix’s share of business. The basic offering is priced at $9 but users can opt for an add on of $2 which will grant them several other benefits. The benefits are similar to what is being offered to Prime subscribers like cloud storage, access to music libraries, two hour delivery in a bunch of cities along with others.
Initially the company was following a different strategy where they were endorsing their service on annual basis for $100. So all Amazon users who signed once could take leverage out of the service throughout the year. However, the company has tweaked its strategy. It is common observation that people do not like making payments upfront and sometimes they are also skeptical about the service. So offering a monthly subscription gives control to the user and adds to their convenience. Thus users are free to opt for monthly subscription for $8.99 for Prime Video or can opt for the complete service for $10.99 per month.
Hence it is easy to predict that Amazon has a significant leverage now. If all the subscribers of the service opt for the full membership then the price will be cost $131.88 for an annum. This means that the company will get $31.88 more if users opt for monthly payments instead of annual. On the other hand, the company has clearly mentioned that the benefits which the company enjoys from the annual service will not be altered whatsoever.
The reason why the company does not want to alter Prime is that only few people will be interested in signing up for complete membership. Most of the subscribers have paid $100 for the Instant Video service. They could not come up with a logical explanation of why to pay for the complete service when it is useless for them.