April 7, 2022
New consumer research from Parks Associates reveals that as of the third quarter of 2021 (ended Sept. 30), Amazon Prime Video’s subscriber penetration rate stood at 45% of U.S. internet households. By comparison, Netflix household penetration ranges from 55% to 67%, according to various industry reports.
“Amazon’s Prime pricing rise, the fourth in its history, comes barely a month after Netflix raised its fees, while Hulu raised its prices last year,” Eric Sorensen, senior contributing analyst at Dallas-based Parks, said in a statement.
Sorensen said Amazon’s debut of its “Lord of the Rings” trailer during the Super Bowl was aimed at underscoring consumer value of the Amazon membership and free video access — despite the subscription price increase.
“With inflation and the cost of content on the rise, we will likely see more providers start to slowly raise their subscription prices, trying to find that balance between revenue growth and consumer value,” Sorensen said.
Parks estimates that in the first quarter of 2021, 77.3 million U.S. households were members of Amazon Prime and that around 71% of them watched Prime Video. Amazon Prime Video is one of the four foundations of the consumer streaming stack, along with Netflix, Disney+ and Hulu.
Prime Video, like its streaming video competitors, is investing in original content offerings to keep its subscribers engaged, to encourage new subscribers, and to lure cord cutters and service hoppers. Many OTT services aired Super Bowl ads this year, promoting not just one title but the range of their content library, to remind viewers of the total value of each subscription.
“These price increases by Amazon have been fully vetted out as part of their long-term strategy to generate more revenue from subscribers over time,” Sorensen said. “Supply chain and increasing shipping expenses are being passed down to customers, but it is doubtful that Prime members will object to a twenty-dollar-a-year membership rise, the first in four years.”