The number of American households who are canceling their cable TV subscriptions and moving to the Internet for their television – known affectionately as “cord-cutters” – is growing faster than the number of new cable TV subscribers. These “cord-cutters” are ditching their cable television, and the exorbitant monthly fees, for online services like Netflix and Hulu. Amazon has made no mistake that they are aiming for this booming business, and they have made great strides in stealing the hearts, minds, and subscribers from Netflix and Hulu.
Amazon’s Prime video service offers many of the same movies and television shows of Netflix, and they offer it at a lower price yearly than Netflix and with more value-added benefits. Until today, Amazon’s Prime’s service cost $79 per year, $17 cheaper than Netflix’s $7.99 per month streaming only option. Furthermore, Amazon Prime includes free two-day shipping on all Prime eligible items from Amazon and a free book per month from the Kindle lending library.
The other popular option Hulu Plus, also $7.99 per month, remains relatively safe when compared to Amazon’s offerings. Hulu’s specialization in prime time television from major networks like NBC and FOX, along with other cable television networks like History, Discovery, etc., make it more of a complimentary service to Netflix and Amazon and not a direct competitor. In fact, many cord-cutters subscribe to a combination of Amazon or Netflix, and then Hulu, to fill the void of traditional cable television (and the wallets of its users when compared to cable).
However, with many people on a monthly budget, Amazon’s $79 per year or bust subscription left many consumers going with Netflix or Hulu, where they could turn it on or off monthly depending on their budgets. Today, Amazon announced that they will now also start offering their Prime service for $7.99 per month, making it a much less barrier-to-entry for customers trying to keep up a monthly budget, even though the yearly price will now match its competitors.
Amazon is no stranger to competing – and dominating in some cases – with major players in the media industry, as they have already taken on with some success Apple in the MP3 market, and still hold firm as the king of e-books with its Kindle platform. With this new pricing strategy, along with their recent deals with major studios for Prime Video, Amazon is poised to become a major player in the streaming video market.
