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Amazon Prime Subs (Narrowly) Prefer Netflix

9 Apr, 2015 By: Erik Gruenwedel

Amazon Prime Instant Video recently won its first Golden Globe for original series “Transparent,” and tens of millions covet Prime’s free two-day shipping on most e-commerce orders. Yet, more people stream Netflix than Amazon Prime — including the latter’s subscribers, according to new research.

Nearly two-thirds (63%) of Amazon Prime subscribers used Netflix in the previous month compared to 59% who used Prime Instant Video, according to a poll of 5,000 respondents conducted by Strategy Analytics in the United States, United Kingdom, Germany and France in the fourth quarter.

Less than half (44%) of Amazon Prime subscribers in the U.S. use Prime Instant Video at least once a week, compared with 55% in Germany and 54% in the United Kingdom.

“In contrast to countries such as the U.K. and Germany, Americans are more likely to subscribe to Amazon Prime for free two-day shipping than for Prime Instant Video,” Leika Kawasaki, digital media analyst with Strategy Analytics, said in a statement. “For example, Americans are twice as likely as Britons to cite free two-day shipping as ‘very important’ in deciding to subscribe, and they’re less likely to use the video service regularly.”

Strategy Analytics research shows that among online U.S. adults not currently subscribing to Amazon Prime, 12% are ‘somewhat likely’ to subscribe in the next year, while 4% are ‘very likely.’ The main reason people won’t subscribe (cited by 53% of respondents) is the price is too high.

Indeed, Amazon Prime last year raised its annual membership from $79 to $99, while Netflix upped its monthly membership from $7.99 to $8.99, or $108 a year. But Netflix charges per month without a contract while Amazon charges an annual fee.

Analyst Kawasaki contends that in addition to the psychological effect of the annual fee, Prime is hampered by Netflix’s deep-pocket and high-profile content spending.

Programs such as “Orange Is the New Black” and “House of Cards” buttress major content license agreements with Walt Disney Studios and DreamWorks Animation, among others. Indeed, Netflix spent more than $2 billion on content last year, while Amazon spent slightly more than half that amount.

“Amazon is needlessly ‘losing’ users to Netflix when, in fact, it should be eating into their user base,” Kawasaki said. “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.”

Netflix reports first-quarter (ended March 31) fiscal results April 15.

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