Did Amazon Confirm The Number Of Prime Members?
Online retailer Amazon (NASDAQ: AMZN) hasn’t exactly been a “fount” of information when it comes to providing data about its Prime membership service.
That is, until now.
To date, the closest Amazon has come to divulging numbers of Prime members was on December 26, when the company indicated that it had "tens of millions" subscribers during its holiday wrap-up and in its 2013 Q3 earnings call when it revealed it had added millions of new members globally.
According to Business Insider, Macquarie’s Ben Schachter said the company has confirmed it currently has 20 million Prime subscribers. Could this be true?
Amazon Prime is a $79 a year membership service that provides free two-day shipping all year long with a number of extras. Those extras include subscription to a streaming video library similar to Netflix (NASDAQ: NFLX). In addition, Prime members have access to the Kindle Owners Lending Library and the ability to “borrow” one of 350,000 Kindle titles per month.
The good news for Amazon is that a number of reports, including one from Consumer Intelligence Research Partners, indicate that Prime members spend more on Amazon than the general public. A lot more. According to the CIRP study, Prime members spent an average of $1,340 per year with Amazon, versus non-Prime shoppers who spent about $650 per year.
Schachter also received clarification of how Amazon defines “member.” Amazon counts each $79 Prime membership as a “member” even though that membership could represent several family members in the household. That means that the actual number of humans is probably far in excess of the 20 million that Amazon counts.
Since Prime membership includes much more than free shipping, specifically access to a huge Kindle library and streaming video that includes more than 41,000 titles, there has been speculation that Amazon has larger plans than just attracting shoppers to its online store.
When it comes to streaming content, most reviewers give a slight nod to Netflix, based on the volume of content. Amazon’s library, however, has been growing. In addition, both services are moving in a direction that favors original content over rights to existing TV shows and movies, something that may eventually make the number of movies offered a moot point.
To that end, Netflix created a database of what it calls movie genres. By Netflix count, there are 76,897 of them. The data provides Netflix with the ability to produce original content that meets the expectations of its subscribers – a huge plus for Netflix.
Meanwhile, Amazon has also dipped its toes into “original content” waters with shows like Alpha House, Betas, and a number of kids’ shows including Annebots and Tumbleaf. For both Netflix and Amazon the move toward original content is financial. The companies can bid on only so much external programming.
Original content meets the goal of providing new programs and it gives the provider exclusivity, a valuable commodity when both entities are going after the same universe of consumers.
Most importantly, at 20 million confirmed memberships, Amazon has clearly demonstrated a goal of securing and retaining as many loyal customers as possible.
At the time of this writing, Jim Probasco had no position in any mentioned securities.
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