Amazon Tests Prime for $7.99 a Month, Just Like Netflix
Amazon is now testing an option that allows customers to pay $7.99 a month to participate in its loyalty program, Amazon Prime, which offers free two-day shipping, video-streaming and book rentals.
The service regularly costs $79 a year, which pencils out to $6.58 a month, so, clearly, this isn’t a cheaper option. But it could attract consumers from Netflix or Hulu, who are currently paying that much for video only, or those who are commitment-shy.
Amazon has been building its library of content to take on Netflix directly for some time now, but by matching its pricing model, this could be considered its biggest move yet to challenge the standalone streaming service.
“We are always looking at ways to improve the shopping experience for our customers,” said an Amazon spokesperson. “We are testing a monthly Amazon Prime subscription.” The option is available to a limited selection of customers right now.
A note sent to investors by Colin Sebastian of Baird Equity Research this morning said the new offer also lines up nicely with the holiday shopping season, but that the short-term nature of the pricing structure could put Amazon at risk for losing money on some users. “While one risk for Amazon is that consumers use Prime for just one month to take advantage of free shipping on large purchases, the test could also reveal that a ready market for alternative pricing, and serve as a new customer acquisition tool,” Sebastian concluded.