April 26, 2018
With over 100 million members worldwide, in addition to global aspirations delivering movies, TV shows, music, books and merchandise to consumers, Amazon April 26 announced it is raising the annual Prime fee by $20 to $119.
CFO Brian Olsavsky, on the fiscal call, said the price hike reflected the increasing services available “for free” to Prime members.
“This is a better reflection of the cost value of the [Prime] program,” Olsavsky said.
He said the last Prime price hike (from $79 to $99 in 2014) occurred when the ecommerce giant offered 20 million items available to ship for two-day shipping. It now has more than 100 million items eligible for Prime shipping.
In January, Amazon raised the monthly Prime fee to $12.99 from $10.99; and added $1 to the $5.99 student fee. But left the annual fee unchanged.
With Amazon locked in a content arms race with Netflix, Amazon Studios is projected to spend upwards of $5 million on original content this year – almost 40% less than its rival. The latest fee hike could help pay for some that content spending.
Meanwhile, Amazon generated nearly $27 billion in first-quarter (ended March 31) online sales, up 18% from the previous-year period with $22.8 billion in sales. The tallies include digital media content from Amazon Instant Video.