×

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.

More Digital

  • Amazon

    Amazon Music’s Free Tier Is More Advertising Play Than Spotify Killer, Analysts Say

    When news began to spread last week that Amazon Music’s long-anticipated free streaming tier was imminent, headlines emerged about its threat to Spotify and Apple Music, with some stories saying that Spotify’s stock price dropped in response to the news. But not only was today’s launch of the free tier basically a soft one — [...]

  • Gay Chorus Deep South

    Why Airbnb Produced Documentary 'Gay Chorus Deep South,' Its First-Ever Film (EXCLUSIVE)

    The latest player to hit the film-festival circuit may be a bit unexpected: Airbnb, the travel-accommodations booking marketplace, developed, financed and produced documentary film “Gay Chorus Deep South,” set to premiere at the 2019 Tribeca Film Festival on April 29. It’s the company’s very first feature film. Directed by David Charles Rodrigues, “Gay Chorus Deep [...]

  • Amazon

    Amazon Music Launches Free Streaming Tier, Through Alexa Only (for Now)

    Amazon Music today basically soft-launched its free streaming tier, in which U.S. customers of its Alexa voice assistant will have access to top Amazon Music playlists and thousands of stations, at no cost. The limited access that the new free service provides — it’s only available through Alexa, and when the listener requests a song, [...]

  • Ben Silbermann, Evan Sharp. Pinterest co-founder

    Pinterest Shares Up Close to 29% on IPO Day

    Shares of the social pinning service Pinterest closed at $24.45 — 28.6% above their IPO price — on the company’s first day at the New York Stock Exchange Thursday as investors were looking to get in on the latest tech listing. Pinterest’s shares opened at $23.75, 25% above the IPO pricing of $19 per share, [...]

  • Netflix Logo

    Netflix to Open Production Hub, Expand Offices in New York City

    Netflix plans to move into a bigger new office in Manhattan and open a Brooklyn production hub — all told, bringing up to $100 million in investments to New York City and resulting in hundreds of new jobs, according to New York State Gov. Andrew M. Cuomo. Netflix’s new corporate offices in the Big Apple [...]

  • MoviePass card

    MoviePass Has Lost Over 90% of Its Subscribers in Less Than a Year (Report)

    MoviePass users apparently hit the exits en masse after it scaled back the number of movies users could see each month: The flailing cinema-subscription provider has seen its subscriber rolls plunge from a peak of more than 3 million to just 225,000 in under a year, according to a new report. The numbers were reported [...]

  • The Nashville, Tenn. downtown area and

    Nashville City Council Sides With Songwriters Against Streamers’ CRB Appeal

    Nashville city leaders have sided against the streaming services Amazon, Spotify, Google and SiriusXM/Pandora in the appeal of the Copyright Royalty Board’s decision that would give songwriters a pay raise. The Nashville Metro Council adopted the resolution as part of its consent agenda earlier this week, although the move is “purely symbolic” and the streamers [...]

More From Our Brands

Access exclusive content