Amazon's Prime streaming subs drive its overall sales; membership jumps 53%

Customers who join Amazon Prime (NASDAQ: AMZN) specifically to stream video through its Prime Instant Video service tend to buy more often from other areas of the retail giant's website as well.

That tidbit of information was let go during Amazon's traditionally tight-lipped quarterly earnings call on Thursday afternoon. And while it doesn't seem like much, it's important to note that Prime membership overall increased 53 percent in 2014.

Financially, Amazon just missed on revenue forecasts, with net revenue increasing 15 percent during the fourth quarter to $29.33 billion (under analyst estimates of $29.68 billion). For the full year, its revenue jumped 20 percent to $88.99 billion. However, it beat analyst estimates on earnings per share for the first time since early 2013. Its adjusted EPS for the quarter came in at 45 cents on net income of $214 million, way over analyst forecasts of just 18 cents.

How much did Prime membership--of which Amazon does not break out many details--affect its fourth-quarter results? Apparently it played an influential role. Besides actual signups, as Business Insider notes, the company's 40 million Prime members spend twice as much on the retail website--about $1,500 annually--as non-subscribers, according to a third-party survey.

Amazon CFO Tom Szkutak confirmed the increased spending patterns in Thursday's call.

"Customers are buying a lot more from us," he said, noting CEO Jeff Bezos' earlier statement that Prime has evolved to be both a physical and digital offering.

"Take video content for example. What we see is customers who come in through our Prime pipeline for video for a free trial, those customers are converting at higher rates to other channels," Szkutak said. "We see that customers that are video streamers, even though we have high renewal rates, they are renewing at even higher rates than others. We see those people who were customers who were streaming have very similar purchase patterns on the physical product side as those who don't."

Amazon also invested $1.3 billion in its Prime Instant Video streaming content in 2014. While it gave no sales figures for the Fire TV Stick, which it launched last quarter, BI's third-party survey noted that 7 percent of its respondents own either the new dongle or its boxy big brother.

For the first quarter of 2015, Amazon is forecasting net sales between $20.9 billion and $22.9 billion, for a growth rate between 6 percent and 16 percent. However, its ongoing investments in international expansion and new products--it also announced a new email service on Thursday--as well as capex expenditures in areas like Amazon Web Services--will continue to dampen the retailer's overall profits. Amazon is predicting an operating loss of as much as $450 million for the quarter.

For more:
- see the earnings release
- listen to the webcast
- Business Insider has this story

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