Amazon's $8.99 monthly video: Paying more for less than Prime
LOS ANGELES -- "YES! About damn time."
That's what 28-year-old Ohio resident John Ryan Chaffin tweeted when he heard about Amazon's new standalone video service on Sunday evening. Though he sees the yearly $100 fee for Prime as too much, the $8.99 monthly fee for just the video service makes sense.
"I've been hoping that they were going to do this since they first brought out Prime," Chaffin, who currently subscribes to Netflix and has DirecTV, told Mashable. "Because I was so reluctant to put $100 down on a service when I didn't know if I'd get my money's worth out of it ... [the video standalone] makes Amazon more attractive to someone like me who doesn't order enough to care that much about free shipping."
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Chaffin wasn't alone in his enthusiasm. Tons of Amazon customers posted on Twitter -- reactions ranged from "finally" to "awesome!" -- when they heard about the new option.
The thing is, $8.99 per month -- still better than Netflix' $9.99 or Hulu's $11.99 for ad-free -- still adds up to more than $107 per year.
Turns out that the best deal in streaming still comes with a year of free Amazon shipping. You just have to pay for it all at once.
Deal or no deal
Many media analysts saw Amazon's standalone video service coming. In January, Wedbush securities analyst Michael PachterIt sent out a financial note suggesting Amazon needs to go beyond Prime to succeed.
"It appears to us that the time is right for Amazon to compete aggressively, and we believe that an Amazon standalone subscription streaming service priced below its Prime price would be well timed for a May launch," he wrote.
Strategic? Yes.
Best for the consumer? Maybe.
Amazon's recent mainstream recognition for its programming has pushed the e-commerce giant into the spotlight, making it a desirable destination for content junkies. At its Television Critics Association presentation in January, Amazon Studios Head Roy Price (above) reported that Prime members more than doubled their own viewing in 2015.
Viewership of Amazon Originals was also 8 times higher in 2015 than during the same period in 2014.
Last year, Amazon took home two Golden Globes for Mozart in the Jungle and five Emmys for its hit series Transparent. Its new drama The Man in the High Castle became the platform's most watched show ever.
There are also even more originals coming, including a series and film from Woody Allen.
"This [new service] could present a great opportunity for Amazon to sign up new subscribers and eventually cross sell other services to them including a Prime subscription," CSS Insight analyst Paolo Pescatore told Mashable. "Offering video as part of Prime was holding Amazon back from launching into new markets, as there was little to choose from in terms of price. It therefore boils down to content and new features such as UHD 4K, HDR, offline viewing and much more."
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Still, when it comes to hit shows and movies, Netflix has dominated the landscape.
After seeing huge success with originals ranging from Orange is the New Black to Fuller House, the Los Gatos-based company has even shifted its focus to mostly creating strong originals.
Ted Sarandos, Netflix's head of content, said at TCA that the company plans to spend about $5 billion on content in 2016, which means about $6 billion in cash. The service expects to offer more than 600 hours of new content in 2016.
Hulu, too, has upped its game in the last year. It has added more to its library of movies (thanks to deals with Epix, IFC and others) as well as original series with Hollywood A-listers (including 11.22.63 and The Path).
Shannon McCarthy, 29, currently subscribes to Hulu but said the new Amazon service may make her open up her wallet.
"I won't drop [Hulu] because I prefer to be able to stay current with shows, as opposed to binge watching later," she told Mashable after tweeting about Amazon's new service. "I used to also subscribe to Netflix, but with my current schedule, I don't really need two subscription services. I may subscribe to the new [Amazon] service because it seems to have a better selection than Netflix."
If more consumers share McCarthy's opinion, Amazon will seemingly have the upper hand in the streaming service marketplace.
Still, there's it's too early to gauge whether people will ditch their current services for this new one or add on to their already long list of subscriptions.
"Amazon is certainly building a strong set of capabilities in both hardware and services to compete with Netflix and others," Pescatore said. "And we say, let the battle commence."
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Topics Amazon
Saba was a Los Angeles-based reporter who covers all things digital entertainment, including YouTube, streaming services and digital influencers. Prior to that, she spent two years at the Los Angeles Times covering entertainment for the Calendar and Company Town sections. Saba grew up in Santa Monica and graduated from Boston University with a B.S. in journalism and B.A. in political science. When not reporting, she is usually binge watching shows online or looking for new coffee shops to frequent.
