LONDON — Amazon is upping the ante in its rivalry with Netflix in the U.K., by merging its two subscription services, Amazon Prime and Lovefilm Instant. A similar move is taking place in Germany.
Amazon Prime, which offers members unlimited one-day delivery on more than 7 million items and access to 500,000 Kindle books to borrow, and Lovefilm Instant, which includes unlimited streaming of more than 15,000 popular movies and TV episodes, will be combined in the U.K. from Feb. 26.
The new service, to be known as Amazon Prime, will be offered for £79 ($132) a year — a 35% saving for all the benefits of the two previously separate services. Netflix is £5.99 ($9.99) a month, so £71.88 ($120) a year.
Lovefilm Instant will be rebranded as Prime Instant Video, and Amazon says it will up its investment in exclusive content and original programming.
Members will have unlimited access to exclusive movies such as “The Girl with the Dragon Tattoo,” “The Hangover Part II,” “One Direction: This Is Us,” “Friends with Benefits” and “Alvin and the Chipmunks: Chipwrecked.”
Among TV dramas on offer will be “The Walking Dead,” “Dexter,” “Vikings,” “Downton Abbey” and “Desperate Housewives,” and children’s shows “Peppa Pig,” “Fireman Sam” and “SpongeBob SquarePants.”
The subscribers will also have exclusive access to Amazon original TV series “Alpha House” at launch, and “Betas,” which debuts soon.
In Germany, the new service will cost Euros 49 ($67.20), which is a saving of 56% compared with the two previous membership prices. It offers streaming of more than 12,000 films and TV episodes. Netflix is expected to launch in Germany in September, according to industry sources.
Richard Broughton, director of broadband at research firm IHS Technology, sees several drivers for the move. The first is heavy competition in the U.K. subscription video-on-demand market.
“Lovefilm has faced intense competition in the U.K. subscription streaming video sector, with the entrance of Netflix and NowTV, and the expansion of Sky, Virgin Media and BT’s on-demand services,” he told Variety. “This move by Amazon of bundling video with the wider retail offering will allow the company to alter consumer perceptions of its streaming offer, sidestep direct competition with subscription video rivals, and bolster uptake of the Amazon Prime subscription service.”
The second driver is a desire to duplicate the U.S. success of Amazon Prime.
“Amazon had accrued more than 20 million Prime subscribers worldwide by the end of 2013 — the vast majority in the U.S. Amazon achieved significant growth in this market last year with Amazon Prime, in part due to its strong video content line-up via Amazon Instant Video in North America. Replicating this success in the U.K. and Germany, with video as a key pillar supporting Prime, will help to sustain Amazon’s wider retail business,” he said.
The third driver is the ability to offer a one-stop shop for digital media.
“Amazon is already the leading ebook service provider globally and reinforced its U.K. and German music offerings with the launch of AutoRip in 2013. Alongside the relaunch of its subscription online video service, Amazon will begin to provide download-to-own and video-on-demand rental films — similarly to services such as iTunes and Blinkbox.
“By bringing its video content offer under the core Amazon brand alongside books and music, the online retail giant is attempting to position itself as the hub for digital entertainment in both the U.K. and Germany, encourage uptake of its Kindle Fire tablets, and use its device and media presence to further strengthen its ecommerce lead.
“To add to this, the impending launch of Netflix in Germany and the recent launch of Snap from Sky Deutschland would have piled the pressure onto Lovefilm’s German operations later this year.”
