As Netflix Inc. (NASDAQ: NFLX) said it would raise prices, Amazon did not mention it is not. However, the price difference may help Amazon.com Inc. (NASDAQ: AMZN) build its Prime services, which include streaming video.
Netflix will raise the prices on some of its streaming services from $9.99 to $10.99 and others from $11.99 to $13.99. These services allow viewing on more than one screen. They will not be levied for current customers.
Amazon’s primary rival in streaming media remains Netflix, which continues to build its arsenal of original content. Amazon entered the same business, but much later. Each company will invest tens of millions of dollars into the original content business.
Amazon has several edges over Netflix, and among them is price. Amazon’s Prime services continue to be available for $10.99. However, it includes streaming media, special offers on products and services at Amazon.com, free shipping, over 2 million free songs and unlimited photo storage. As a major by-product for Amazon, studies show Prime members are much more likely to buy goods and services at Amazon than nonmembers are.
The increase in Netflix fees and Amazon’s decision to hold Prime fees where they are may not gain either company subscribers. This depends on how closely people watch the prices they pay for streaming media. Shifting from one to another involves some effort, and for $10, $11 or $13 a month, most people may not bother.
If price is an element of which service people use, however, Amazon’s decision to hold its price may help its market share in streaming media considerably.
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