Amazon Prime may have 54M subscribers, must focus on retention, analyst says

Amazon's Prime membership program, which includes access to its Prime Instant Video streaming service, may have as many as 54 million subscribers in the United States, according to one analyst firm's estimates. If so, that indicates subscriber growth year-over-year of 35 percent, up from an estimated 40 million members at the end of 2014.

"U.S. Amazon Prime membership increased steadily in 2015," said Josh Lowitz, partner and co-founder at Consumer Intelligence Research Partners (CIRP), which analyzed buyer shopping patterns in the fourth quarter.

CIRP surveyed 500 U.S. consumers who made purchases at between October 2015 and December 2015.

While the retail and SVOD giant trumpeted a couple of big subscriber jumps during the year -- including its Amazon Prime Day on July 15 and its big holiday season -- CIRP said that signups appeared to be more evenly spread out throughout the year. Still, Amazon noted that 3 million people signed up for Prime during the third week of December 2015, resulting in a net 7 million new subs during the holiday season alone according to the analyst firm.

Subscriber growth, while significant at 35 percent, was much lower than Amazon's year-ago growth rate of 54 percent. That indicates the Prime program is maturing, CIRP's Mike Levin, partner and co-founder, said. "We expect this, as the program matures in the US. So, member retention becomes even more important."

Free two-day shipping is one of the primary reasons many subscribers join Prime, Levin said, with Prime Instant Video and other offerings providing additional incentive to keep their membership after the 30-day free trial period ends and beyond.

The firm also estimated that Amazon Prime subs spend almost double per year than non-subscribers: $1,100 versus just $600. That jibes with statements by Amazon that it sees a lot of "crossover" between subscribers using its streaming service and then purchasing items via its retail section, and vice versa.

Could Amazon's streaming service have a bigger effect on consumer decisions to subscribe in the future? According to a Decider article, the company's focus on high-quality, "niche" type original series like Transparent, Mozart In The Jungle, Catastrophe, The Man In The High Castle and latest entrant Mad Dogs is generating buzz. Receiving a couple of Golden Globes doesn't hurt, either, when it comes to attracting viewers to its SVOD component.

And in terms of retention, the company is bringing its one-stop shopping mentality to streaming with its new Streaming Partners service, which allows Prime subscribers to pay for their subscriptions to other participating SVOD services like Showtime Anytime through their account -- a new way to lock subs in to Prime.

Amazon will announce its fourth-quarter earnings after the market closes on Jan. 28.

For more:
- see the release (PDF)
- see this Decider article

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