Amazon has launched an $8.99/month standalone plan for its Prime Video service, breaking it out of the overall Prime service for the first time. The company is also offering a $10.99/month option for Prime itself, a first time departure from the traditional annual approach.
The standalone plan for Prime Video means that for the first time Amazon’s video service can be valued by consumers on an apples-to-apples basis with other SVOD services without being clouded by other Prime benefits. By bundling video with Prime Amazon was able to introduce video to millions of Prime subscribers without them having to make an incremental purchase decision, enabling buzz to build about Prime’s original programming.
Now, with the monthly plan, consumers who didn’t necessarily need Prime’s shipping or other benefits, but who have seen ads or heard from friends about Amazon’s growing stable of original content can inexpensively test the waters without an annual commitment.
Netflix is likely the biggest competitor impacted by Amazon’s move, but in reality all SVOD services are affected one way or another. As I’ve written previously, consumers are unlikely to subscribe to more than a handful of SVOD services. When video was a part of Prime, many consumers looked at it as a bonus on top of shipping which is what they were really paying for.
But those who now subscribe to the standalone monthly Prime video service will think of it as part of their monthly SVOD budget, which in turn puts pressure on other SVOD services to stay in the mix. And by pricing it at $8.99 - less than what most Netflix subscribers will pay after the upcoming rate increase and also less than ad-free services like Hulu, HBO Now and Showtime - Amazon is using its deep pockets to make a strong value appeal.
One other dimension of the monthly approach is that Amazon gets new flexibility in its Streaming Partners Program, which promotes/packages third-party SVOD services. Amazon can tap viewership data on Prime video users to recommend certain incremental SVOD services and then offer them in aggressive bundles for monthly subscribers.
The bottom line is that Amazon just made the already competitive SVOD category even more so.
(Note: I’ll be doing a keynote interview with Amazon’s VP of Digital Video, Michael Paull tomorrow at the NABShow Online Video Conference in Las Vegas. We’ll certainly discuss the new monthly pricing option.)