As predicted, Amazon (Nasdaq: AMZN) has raised the annual cost of a subscription to its Prime service to $99 per year, up $20.
Reports surfaced in January that Amazon was considering a rise in the price of the membership, which offers subscribers access to its Prime Instant Video library along with free two-day shipping on most of the items in its online catalog and discounts in several areas such as its Kindle section.
The price hike comes after a lackluster fourth quarter--the company reported earnings per share of just 51 cents, well below the forecasted 66 cents EPS--and increasing price pressures such as content licensing.
"The cost for that content is extremely high. We're talking billions of dollars. So that must be having an impact," analyst Colin Dixon of nScreenMedia said in a February podcast discussing the possibility of a rate hike.
Subscribers to Amazon Student will pay $49 per year, according to TechCrunch, while the rate for a Prime Fresh membership will remain $299.
What effect the price hike will have on subscriber numbers remains to be seen. While TechCrunch's Matt Burns said he will continue to be a Prime member because "I simply hate going to the store," other subscribers may not absorb the increased cost so well.
Dixon said in the podcast that having to come up with an entire year's subscription fee may be a turn-off to potential Amazon customers, while Netflix's month-to-month pricing could draw them. "One of the attractive things about Netflix is you don't have to make a commitment," he said. "That barrier to entry is a little bit of a worry."
For more:
- TechCrunch has this article
- listen to this February podcast
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