Amazon Hikes Price of Prime to $99 per Year

Amazon is raising the price of its Prime free-shipping program for U.S. members — which includes access to the unlimited Prime Instant Video service with thousands of titles — from $79 to $99 per year.

It might have been an even bigger increase: Amazon had said it was considering a 50% jump, to $119 annually.

“For the first time since it was introduced nine years ago, the price of Prime is going up,” the company said in a notice on its website. Amazon also is notifying Prime users via email about the change. The service offers free two-day shipping for millions of products, with other benefits including “tens of thousands” streaming-video titles.

Amazon didn’t provide an explanation for the 25% hike in the customer notice. On the eretailer’s fourth-quarter 2013 earnings call in January, CFO Tom Szkutak said Amazon was considering raising the cost of Prime in the U.S. by $20 to $40 per year, citing shipping costs and increased usage of the program.

SEE ALSO: Amazon Mulling Up to 50% Price Hike for Prime, But Denies Rising Video Costs Play a Part

U.S. Prime users spend around $1,500 per year on merchandise, compared with $500 for non-Prime users, according to estimates from Bernstein Research analyst Carlos Kirjner. Over the past six years, Amazon Prime’s ordering and shipping costs have risen, cutting the upside of the service from $65 per user per year to $34 per user per year, Kirjner estimated in a Feb. 28 research note.

“Amazon would come out ahead if a price increase led to a defection of fewer than 50% of Prime users,” Kirjner wrote, noting that he wouldn’t expect a large number of users to cancel their subscriptions after a price hike.

Over the past year, Amazon has been bulking up the content selection in Prime Instant Video, including several exclusive subscription VOD deals, as it tries to build a credible rival to Netflix. Those include exclusive streaming rights for PBS’s “Downtown Abbey,” CBS’s “Under the Dome,”, FX’s “The Americans” and the TV series “Veronica Mars.”

Amazon also has expanded its roster of original series for Prime Instant Video, and recently ordered four new series: supernatural thriller “The After” from Chris Carter (“The X-Files”); cop drama “Bosch” based on Michael Connelly’s Harry Bosch series; comedy “Mozart in the Jungle”; and dark family comedy “Transparent,” written and directed by Jill Soloway (“Six Feet Under,” “United States of Tara”).

But while Amazon has been writing bigger checks for Prime Instant Video content, Szkutak specifically denied that TV and movie licensing pacts were a factor in the move to increase the Prime subscription price. “Certainly video, Prime Instant Video we are investing (in) very heavily, and so those are certainly costly,” he said on the January earnings call. But, he said, “Those aren’t the reasons for the price increases that we’re contemplating.”

SEE ALSO: Amazon to Order Four Series Including Drama From ‘X-Files’ Creator (Exclusive)

Meanwhile, Amazon last month said it would merge its two subscription services in the U.K. and GermanyAmazon Prime and Lovefilm Instant video — and raise the price of Prime in those countries. In the U.K., Amazon Prime is now £79 ($132) a year, up 61% from the previous £49 annually while the company noted the new price is a 35% savings compared with the price of the two previously separate services. In Germany, the new combined Prime service costs €49 per year ($67.20), a 69% increase from the previous €29 for the free-shipping program.

As of the end of 2013, Amazon said it had “tens of millions” of Prime users worldwide, which implies at least 20 million members. The company offers Prime in countries including the U.S., Canada, the U.K., Germany, France, Japan, Spain and Italy.

In the U.S, existing Prime members will pay $99 per year on their annual renewal date, while and Amazon Student members will pay $49 for the program, the company said.

Popular on Variety

More Digital

  • fundo logo

    Google‘s Area 120 Is Testing Fundo, a Crowdfunding Service for Creators (EXCLUSIVE)

    Google’s skunkworks lab Area 120 has been quietly testing an events-centric crowdfunding service for YouTubers, Variety has learned. Called Fundo, the service allows creators to invite their fans to virtual meet & greet sessions and other paid online events. A Google spokesperson confirmed the testing in a statement provided to Variety: “One of the many [...]

  • Telling Lies - Logan Marshall-Green

    Sam Barlow's 'Telling Lies' Government-Surveillance Thriller Game Sets Release Date

    After more than two years in the works, “Telling Lies” — the investigative thriller from acclaimed game creator Sam Barlow — is ready to take the stage. The game, produced with and released by Annapurna Interactive, will be available next Friday, Aug. 23, via Steam and Apple’s Mac and iOS app stores. “Telling Lies” will [...]

  • YouTube logo

    YouTube Will Stop Letting Copyright Holders Seize Revenue via Manual Claims on Very Short Music Clips

    YouTube is pushing back against overzealous copyright policing by music companies. Starting in mid-September, the video giant will forbid copyright holders from making manual claims to commandeer revenue generated by YouTube videos that include very short music clips (e.g., five seconds of a song) or “unintentional” music (like music from passing cars). “One concerning trend [...]

  • Chelsea Handler memoir book buy online

    Chelsea Handler Bonds With Alexa in iHeartRadio Smart Speaker Promo

    iHeartRadio has teamed up with Amazon to promote Chelsea Handler’s podcast “Life Will Be The Death Of Me.” Beginning this Thursday, users of Amazon’s Echo smart speaker and other devices with Alexa built-in can opt to get their mornings started with Handler cracking jokes and exchanging banter with the smart assistant. Users simply have to [...]

  • David Messinger, Activision Blizzard

    Activision Blizzard Hires CAA Veteran David Messinger as CMO

    Activision Blizzard tapped David Messinger, a former 15-plus-year veteran of CAA, as its first corporate-wide chief marketing officer. Messinger, based in Santa Monica, reports to Coddy Johnson, Activision Blizzard’s president and COO. It’s the first time the video-game company has appointed a CMO who will oversee the global marketing operations across all of Activision Blizzard [...]

  • Ashley Flowers - Crime Junkie

    'Crime Junkie' Podcast Host Ashley Flowers Responds to Plagiarism Allegations

    Ashley Flowers, creator and host of “Crime Junkie” — currently the No. 1 true-crime podcast — has been accused of using material in her show from multiple sources without credit. In a statement sent to Variety, Flowers said in part, “we recently made the decision to pull down several episodes from our main feed when their [...]

More From Our Brands

Access exclusive content