Amazon, the Seattle-based company known for its e-commerce platform, continues to move beyond what it was aimed for. The company is now challenging Netflix to become the primary destination for video streaming. On Sunday, April 17th 2016, the online retailer giant said that it will begin offering its video-streaming service as a standalone option for the first time.
With a monthly subscription that costs $8.99, Amazon's offering is a dollar less than the most popular plan from Netflix.
Netflix happens to be one of Amazon's customers using its cloud-computing services. For years, the two companies have worked together by benefiting one another. One of which was offering exclusive content deals and original series like Netflix's "House of Cards” and Amazon’s “Mozart in the Jungle."
But as Amazon sees its Primer service as one of the best deals on the internet, its asking $99/year price can be a little daunting to some. The company that spends about $3 billion on streaming video content annually, compared with $4 billion for Netflix, is putting a cut on its price. Amazon is also rolling out a new monthly subscription offers and breaking out Prime Video into its own subscription for the first time.
What's more, Amazon's new monthly plan is released at the same day as Netflix's late Monday quarterly earnings announcement.
The new subscription costs $11 a month for Prime and $9 for Prime Video. The price is not so subtle, but can compete with Netflix which just raised its monthly subscription that ranges from $7.99 to $11.99 a month.
Amazon's monthly subscriptions make sense because this will allow more subscribers. The price is a little more expensive than the regular $99/year Prime offer, but could be a better deal if subscribers are only needing Prime occasionally.
A spokeswoman from Amazon said the new monthly option could be turned off or on as customers wished, a possible benefit for shoppers during the busy holiday season.
Amazon's Prime service has become one of the company's crucial component in growing its retail dominance. In addition to providing a steady revenue stream from membership fees, Prime customers spend as much as double what non-Prime customers do in a year, by some estimates.
This has made Amazon to further expand beyond a simple e-commerce to an all-in service that benefit its core business.
Previously, Amazon has made deals for HBO's older contents, as well as with premium TV network Epix, whose catalog includes "Hunger Games: Catching Fire" and "World War Z." In a more recent news, Amazon has also signed director Woody Allen for an exclusive TV series. The company has been an aggressive buyers by spending billions to be on top of video-streaming service. Something that has come to Netflix as its main competitor in the U.S..
Amazon's move comes as people are starting to be in the market where TVs are not anymore "plugged". More people are paying for subscription rather than paying to watch traditional TV networks on cable-providers. The decreasing price for Prime is also meant to get more subscribers with lower income as the freedom to opt-in to the service on a month-to-month basis, is potentially making it a more attractive option to people who found the $99 upfront annual fee too costly.
Amazon will also continue to experiment with new initiatives to pursue lower-income households. For example, it recently offered a 20 percent discount on new video games to all Prime users. These are all part of Amazon's plan to get Prime to 50 percent of U.S. households by 2020.
At the mean time, Amazon is not disclosing the total Prime subscribers, but estimates range from 40 million to 60 million as of 2015. Netflix on the other hand, is already having 43.4 million paying customers in the U.S. only.