HBO's deal with Amazon to stream content for Prime users may be paying off already. Over half of consumers who originally thought the new $99 subscription rate for Amazon Prime was too high now feel that the cost is justified, due to the addition of HBO content.
At this point, we've come to expect a shocking announcement or two from Amazon on a regular basis, but last week was a doozy. The Internet retailer declared that it has entered a multi-year contract with HBO to be the sole streaming provider of its content. That means that Prime members will be the only users who are able to stream HBO shows without subscribing to the channel itself.
This was obviously a huge blow to Netflix, the undisputed leader in the streaming media market. But it would seem that the positive effects extend Amazon's competitive edge against its content rival.
According to a DealNews survey, 54% of consumers who originally thought the new $99 subscription rate for Amazon Prime was too high now feel that the cost is justified, due to the addition of HBO content. They believe that the union has made it more attractive for them to renew their existing subscription or subscribe anew, despite the price hike.
This isn't terribly surprising, as the most common complaint when the hike was originally announced was the desire for better value from the streaming library. In theory, if a consumer is already spending $7.99 a month for Netflix (which may increase by $1 or $2 soon), then he is forking out $96 a year for streaming alone; if Amazon can provide a comparable or superior streaming library, then $3 more for Prime — which also provides free shipping, in addition to a plethora of other perks — seems like a no-brainer.
And that's ultimately great news for Amazon, as its sweeping business seems to be distilled down to a single idea: do everything it can to entrench people in its ecosystem, to the extent that actingoutside of it becomes tedious. Prime is one of the major tools to help orchestrate this goal, and Amazon's promotion of the service will likely only deepen. For example, rumor has it that the long-awaited Amazon smartphone will come with a "Prime Data" plan that allows users to stream its music, movies, and TV shows without dipping into their monthly data allotment from their wireless provider.
It's also important to remember that Amazon is slowly losing the battle over collecting state sales tax, which has had a negative impact on the volume of transactions in affected states. Therefore, entangling customers in its web of convenience will become utterly crucial towards maintaining commercial dominance. When getting what you need or want is a few easy clicks away, customers begin to care less about other options. As one shopper explained in a BBC program (about how half of online transactions in the UK take place through Amazon): "If I want to know something, I'll Google it. If I want to buy something, I'll Amazon it."
The more Amazon is able to enlist people in its Prime program, the more that mindset pervades.
Lindsay Sakraida is the features director for Dealnews.com, where this article first appeared: http://dealnews.com/features/With-HBO-on-Board-54-of-Consumers-Now-Think-Amazon-Prime-Is-Worth-It/1037592.html