Amazon.com Inc. raised the monthly fee for the US version of its Amazon Prime fast-tracking and video streaming service by US $ 2 (RM8) on January 19, which makes subscribers upgrade to a plan annual.
It was the first increase in Prime rates in nearly four years and comes at the end of another bullish year and holiday season for Amazon's dominant online shopping platform.
The move also comes after an increase in rates by rival video streaming Netflix Inc. in October.
Amazon increased its monthly plan rate to US $ 12.99 (RM51) from US $ 10.99 (RM43), while maintaining the annual rate of US $ 99 (RM390). It also raised the monthly subscription rate for university students to US $ 6.49 (RM25) of US $ 5.49 (RM22).
"It's a good value, over time they have raised the price, I do not think they lose many members," said Tigress Financial Partners analyst Ivan Feinseth.
"Those who use it the most get the most value and will not mind the higher price, and those who do not use it are not the best customers, so even if they are dropped, it's not a big loss for Amazon . ," he said.
As of September, Amazon had about 90 million Prime members in the United States, according to research firm Statista. The company itself does not reveal the number.
Netflix has 52.77 million subscribers in the United States and its global account is 109 million.
Current Prime and Prime Student members will pay the new price for renewals after February 18, Amazon said on its website.
Amazon maintained a monthly subscription fee for its independent membership of Prime Video, which gives members access to premium movies and original content TV shows, unchanged at US $ 8.99 (RM35). Netflix's basic subscription plan rate is US $ 7.99 (RM31) per month.
Amazon, which together with Netflix faces competition from Hulu and YouTube from Alphabet Inc., has been spending a lot to do original shows.
Prime alone has the additional dimension of offering discounts to subscribers and other benefits of its shopping platform, which helps the company attract more buyers.
The company shipped more than 5 billion items worldwide through the subscription service in 2017 and revenue from subscription fees that include Prime increased by 59% to US $ 2.4bil (RM9.45bil) in the quarter ended September 30. The company reports its fourth quarter on February 1.
"We only expect to see a 2% drop in this price increase with many customers moving on to the annual subscription which is the 'golden goose' for Bezos & Co since once in the annual plan Customers rarely change. " GBH Insights analyst Daniel Ives said.
Amazon shares rose 0.5% to US $ 1,300 (RM 5,121.87) on January 19. Reuters