Amazon Abandons $7.99 Monthly Prime Test Pricing17 Nov, 2012 By: Erik Gruenwedel
Amazon has stopped testing a $7.99 price point for the Prime membership loyalty program; continuing with the current $79 annual fee.
In a Nov. 16 post, CEO Jeff Bezos said the original fee represented the best strategy going forward for Prime, which in addition to offering two-day delivery on most items, allowed members to unlimited streaming access to about 30,000 TV shows and movies to select connected consumer electronics devices.
The $7.99 price point, which matches Netflix and Hulu Plus subscription video-on-demand services, would have translated into a 21% price hike on the annual Prime fee.
“We regularly test new options for our customers,” Bezos said succinctly. “At this time, we’ve completed our test and are no longer signing up new customers for Amazon Prime monthly memberships.”
Indeed, Amazon could have used the extra revenue as it is reportedly losing hundreds of millions on Prime Instant Video as the ecommerce giant ratchets up content license spending, Netflix CEO Reed Hastings reportedly told Dow Jones.
Hastings cited his projection on what it costs Netflix to acquire content license rights, including its former exclusive deal with Epix, which Amazon now co-opts.
An Amazon spokesperson used the opportunity to plug Prime and reiterate company policy that it does not to comment on third-party speculation.
“Not only do Prime members get unlimited streaming video, but they also get free 2-day shipping and the Kindle Owners’ Lending Library as well,” spokesperson Andrew Herdener told AllThingsD.com.