What People Use Amazon Prime For

A while back, I shared some results from a survey on Amazon Prime usage, in the context of making a broader point about how subscription services can be exclusionary to those with lower or unpredictable incomes. Today, I want to share the main data points from that survey, which looks at how the Amazon Prime service is used by US-based subscribers. Prime offers a variety of features and benefits but I focused on two key elements: free, two-day shipping and streaming video. The survey didn’t ask about any of the other features or benefits.

Amazon’s streaming-only offer

I conducted this survey the week after Amazon announced it would make its streaming video features available as a separate subscription for the first time. This change, which Amazon resisted for so long, made me wonder whether there were many existing Prime subscribers who were subscribing solely for the video features and who might make the switch to this alternative offer. Interestingly, this offer is not heavily promoted in the Prime section on the Amazon website, which certainly gives the impression that the $99-per-year, all-in option is the only one. However, if you manage to find the link which says “See more plans”, you get this comparison:

As you can see, the video-only plan is only offered month-to-month and it’s $2 less than the monthly option for the full Prime service. However, it also works out at about $8 more than the traditional annual Prime subscription over the course of a year. Clearly, this isn’t something Amazon is pricing to entice existing customers to switch.

Survey shows video is an add-on, not the main attraction

In this context what the survey shows is, for current Prime subscribers in the US, video is mostly an add-on benefit rather than the main reason people use Prime. Just 5% of respondents said they don’t use the shipping features, while the other 95% or so all use the two-day shipping benefit at least sometimes (the numbers don’t sum to 100% because of rounding):

Given the higher pricing (on an annual basis) and the very small number of people who currently use Prime only for video, it’s extremely unlikely any of the existing base of subscribers in the US will make the switch to this new offering. Rather, it seems intended almost entirely to attract new subscribers who don’t see the attraction of free two-day shipping but want a streaming video service that isn’t Netflix but offers the same monthly option. The other interesting question (which wasn’t part of the scope of this survey) is to what extent existing Prime subscribers signed up mostly for the video option but then found themselves using the free two-day shipping anyway.

Amazon’s flywheel approach at work

This, after all, is the genius of the Prime subscription model – there are multiple entry points but traditionally they’ve all offered the same set of features and benefits and subscribers may well end up using others beyond those that originally attracted them. As this happens, they get sucked further and further into the Amazon ecosystem and it gets harder to leave, while they spend increasing amounts of money buying goods on Amazon.com. Conversely, it’s also interesting to note over 40% of the total base uses video either exclusively or more commonly alongside the shipping benefits. There’s no risk or cost to using these other features per se, they’re each attractive in their own way, and each deepens use of the full set of Amazon products and services – this is Jeff Bezos’ famous flywheel strategy.

The long and the short here is the new video-only option is buried for a reason – Amazon feels the need to offer a more direct competitor to Netflix for those who want it and has priced it at a dollar less per month than Netflix’s new pricing. But Amazon doesn’t get nearly as much long-term benefit from a video-only subscriber as from a full Prime subscriber. The best it can hope for is that video-only subscriptions serve as a funnel (or, less charitably, a gateway drug) to full Prime subscriptions in time, especially once people do the math and realize that it is actually cheaper.