Amazon Ups Annual Prime Membership Fee to $9913 Mar, 2014 By: Erik Gruenwedel
Speculation persists move could prompt similar price hikes by Netflix and Hulu Plus
As expected, Amazon March 13 began informing Prime members it will be increasing their annual subscription $20 to $99, effective on the renewal date.
“We are writing to provide you advance notice that the price of your Prime membership will be increasing. The annual rate will be $99 when your membership renews,” read the email from Amazon.
The price hike equates to $8.25 a month, which is 26 cents a month more than Netflix and Hulu Plus’ respective $7.99 fees.
Notably, Amazon is offering the current $79 annual Prime membership rate to first-time users who subscribe by March 20.
Amazon, which recently disclosed it has 20 million Prime members, first announced the price increase during its most-recent fiscal call, citing increases in fuel costs and related expenses.
What wasn’t directly mentioned is the fact Amazon has significantly upped its content spending on third-party licenses for original and exclusive TV shows and related fare for the Prime Instant Video streaming service, which is included in the Prime membership.
Prime Instant Video is considered Netflix’s biggest competitor in the United States, United Kingdom and Western Europe.
The move fueled speculation that Netflix will initiate a price hike to meet rising content licensing costs, among other issues.
In an email, a Netflix spokesperson wrote, “We're not going to comment on Amazon's pricing.”
In Netflix’s most-recent shareholder newsletter, CEO Reed Hastings and CFO David Wells reiterated the SVOD pioneer was still researching pricing options. Last April it bowed a $11.99 monthly plan that allows four members of a family to stream Netflix concurrently.
“If we do make pricing changes for new members, existing members would get generous grandfathering of their existing plans and prices, so there would be no material near-term revenue increase from moving to this potential broader set of options. We are in no rush to implement such new member plans and are still researching the best way to proceed,” Hastings and Wells wrote Jan. 22.