Watch out, Netflix: the competition for subscribers is about to get tougher.
Amazon is now getting into the monthly subscriber business, putting it in direct competition with other streaming services, including Netflix and Hulu, as Americans turn from traditional TV providers to a "smorgasbord" world of pick-your-own programming.
The Seattle-based e-commerce giant has unveiled two monthly subscription plans in a bid to lure more subscribers, particularly those who currently subscribe to Netflix. Amazon customers will now be able to pay $8.99 per month to stream television shows and movies, a similar plan to Netflix's standard subscription, which currently charges subscribers $7.99. The second plan will cost $10.99 to stream Amazon content, but will also include other perks such as free two-day shipping on Amazon orders, the Kindle Lending Library, music streaming, and other services.
The new plans present a fresh option for subscribers who have been put off by Amazon's yearly plan, which required subscribers to pay $99. The monthly plans will also allow for flexibility, since users may cancel their subscriptions at any time. When compounded yearly, however, the new plans will be much more expensive than the $99 price that the company has been charging. A user who subscribes to the $10.99 per month will end up paying $32.88 more per year, while those who subscribe to $8.99 will pay $8.88 more, without receiving Prime's added perks, such as free shipping.
The company's announcement comes a few weeks after Netflix announced that it will be increasing the subscription fees for its existing subscribers, impacting up to 17 million US subscribers. Starting in May, Netflix's standard subscribers will pay $9.99, a dollar higher than they are currently paying. That means that the $8.99 will be cheaper than Netflix’s standard plan.
Amazon already commands more subscribers than Netflix. January estimates by Consumer Intelligence Research Partners put Amazon with 54 million subscribers, commanding 9 more million subscribers than Netflix. Management firm Piper Jaffray recently estimated that Prime's numbers are even higher, between 57 million 61 million subscribers.
The e-commerce company has also been trying to compete with Netflix in producing original content. Amazon's popular content includes "Transparent" and "Mozart in the Jungle," both of which have won Golden Globe awards. But Netflix is still Americans' preferred choice for original content, according to a recent Morgan Stanley survey: 29 percent of respondents said Netflix had the best original programming, compared to only 4 percent who picked Amazon.
Last month the company announced a partnership with Comcast that will allow the Amazon to offer cable, Internet, and phone subscriptions via the Amazon Cable Store.
Ultimately quality, not quantity, may determine which companies sink or swim in the new media landscape of "smart TV," where customers can cherry-pick their programming.
"What is becoming increasingly important is not where the TV series is streamed, but how good the TV series is," media expert Paul Levinson, a professor at Fordham University, told The Christian Science Monitor in 2014. "Which network will come up with the most original, exciting programming? The answer to that question will determine which networks will thrive. The convergence of all media means that content is king."