Amazon Prime undercuts Netflix with new subscription model

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Looking to give its competitors a run for its money, Amazon has introduced new subscription options for its Prime streaming service that undercuts Netflix’s monthly price and removes the sticker shock from its pay-up-front service.

The online giant announced Sunday, April 17, that it’s going to offer a Prime price plan of $8.99 a month to stream movies and television shows. For $10.99 a month, customers can take advantage of the other benefits of Amazon Prime, the biggest being free two-day shipping, The New York Times reports.

“Now, by broadening the monthly options for Prime to anyone and introducing a video-only service, the company is making it easier for people to compare the price of Prime to that of Netflix, the dominant subscription streaming provider, with more than 75 million subscribers globally,” the paper reports.

Up until now, Amazon offered Prime by forcing customers to pay $99 up front. For those who plan to use the service for a full year, that’s still the better deal at $8.25 per month. Users opting to pay monthly for full benefits, including the free shipping, would pay about $33 more annually.

Amazon’s announcement comes at a time where Netflix is preparing to increase its monthly price from $7.99 to $9.99 per month. That increase is slated to come in May and it has investors nervous.

“The potential churn impact has been a central question for many investors,” Baird analyst William Power wrote in a recent note, reported by Forbes.

The move could also spark healthier competition, however, when it comes to original content. According to a Cut Cable Today study, Netflix came in fourth, behind HBO, Showtime and FX when it came to average reviews of original programming. Amazon came in sixth behind Netflix and AMC.

Amazon does have some wins in its portfolio, including the rights to “Downton Abbey” and “Mr. Robot,” which aren’t available on Netflix. Its original programming “Transparent and “Mozart in the Jungle” have also proved to be popular.

Andrew Dodson

Andrew Dodson is a journalist from Michigan who writes for MLive.com, the state's top online news source. Email him at andrewdodson@streamingobserver.com.
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