David Farnor | On 21, Jun 2014

1 in 3 Amazon Prime users do not watch videos, according to a new report from RBC Capital Markets.

The Canadian investment experts conducted a survey (published by TIME) following Amazon’s recently-launched Amazon Prime Music, which in turn followed Amazon Prime Instant Video in the retailer’s attempts to position itself as a hub for all your media needs.

Amazon’s rebrand happened earlier this year and saw LOVEFiLM Instant replaced by Amazon Prime Instant Video and Amazon Instant Video. The former costs £5.99 a month for unlimited streaming of film and TV – ostensibly a rival to Netflix UK – or £79 per year for a full-blown Amazon Prime membership, which also includes free next-day delivery and ebook lending for Kindle owners. The latter is a pay-per-view service that allows customers to buy and rent titles not available as part of a subscription.

It’s an impressive package, especially now that Amazon has added shows such as Community and Mad Men for UK subscribers, but in the US at least, some Prime members skip over the streaming part altogether. 31 per cent of them said they had never used Amazon Instant Video, while just 43 per cent of Prime members said they use it a few times a month.
38 per cent said they use it once a year.

“Future investments in content, awareness campaigns, and the release of Amazon Fire TV could help boost these figures over time,” notes the report.

Amazon has already been investing heavily in content, from the resurrection of the BBC’s cancelled Ripper Street for a third season to the above deals for Mad Men and Community. It has recently added Inception and The Dark Knight too, along with a bunch of other Warner Bros. titles, such as Batman’s animated series. Is it a matter of awareness that is the problem? Do Amazon Prime customers not know that video streaming is there? Or do they not care?

Certainly, when LOVEFiLM was rebranded, there was a backlash among existing customers who were unsure what they were getting or whether they would have to pay more. Some cancelled their service altogether. Is it simply that the people who want streaming video do not want to sign up to a platform with the clunky title of “Amazon Prime Instant Video”, while the people who want next-day delivery on clothes aren’t interested in media at all?

RBC’s research also noted that there was more sensitivity surrounding a price hike for US Amazon Prime subscribers compared to the recently raised fees for Netflix – although it notes that “the magnitude of the price increase was much greater with
Amazon, and the downside of cancelling relative to the value proposition is much smaller”.

For Amazon, the statistics will raise some important questions – but the commercial giant certainly has the time to come up with an answer. 61 per cent of Amazon Prime subscribers increase their usage of Amazon once they become Prime members, either “much more”, “moderately more” or “slightly more”. In terms of simply keeping people on Amazon’s website, Prime is a success: Amazon, after all, is a shop, with many more departments besides streaming media – the more time people spend in a shop, the more likely they are to buy something.

Indeed, Amazon Prime subscribers spend approximately 2x more than non-Prime customers, according to RBC: in the last 90 days alone, 64 per cent of Prime member respondents spent over $100 vs only 27 per cent of non-Prime customers.

Prime, then, has certainly got people in the door. The question is: how do Amazon get people to start browsing its video section?

 

[socialpoll id=”2207295″]

Add to Watchlist