Netflix, a company known for streaming videos and movies, after being more of an online video store, will be seeing more competition from one of the big competitors- Amazon Prime. The Amazon subscription announced this week their intentions to go from an annual subscription of their services to a monthly one.
Previously, someone wanting to subscribe to the services, which also included free shipping, a music library, and streaming of original TV shows and movies would only be able to get that streaming service as part of the bundle in an annual $99 subscription.
This will be the first time Prime Video will be their own. Now the service will be comparable to Netflix and Hulu Plus with their monthly subscription service. If one chooses to do the service on its own, it will cost $8.99 a month.
This will definitely be in competition with Netflix, as starting in May, Netflix is hiking up its prices for many members. Longtime subscribers to the streaming video plan have been paying $7.99 a month. In May, it will go up to $9.99 a month.
The better value for Amazon Prime will still be to bundle and pay the one-time yearly subscription fee, considering the price per month for just the Prime Video would cost users $107.88. Some people don't like the annual commitment, so Amazon expects that will be an appeal to some.
If users want the full Amazon Prime bundle, but want to avoid an annual commitment, there will also be an option to pay $10.99 a month, which will make the cost $131.88 a year, when all is said and done.
Amazon tested the monthly option last month, partnering with Sprint and allowing those customers to add the Prime bundle in with their cell phone bills.
Marc Randolph, co-founder of Netflix, told CNBC in an interview that he's not worried about competition with other streaming channels. He states, "As a personal subscriber, I see no problem subscribing to multiple services. I don't just only watch Netflix. I do watch HBO. I do watch movies from Apple, just as the same way I eat at different restaurants all the time. I think one of the wonderful things about this is that as each of these services begins creating their own content it purely creates an explosion of choice, and I think that's a wonderful thing. Whether that ends up being in the hands of a small number of companies, or a large number, either one is fine with me as long as we have great things to watch."
Netflix reported on their 1st quarter earnings on Monday. While the company has done well so far in 2016, with 81.5 million subscribers around the world, the forecast showed that growth in the second quarter would fall below expectations because of an international subscriber projection. This caused stock shares to fall 11%
With a $2 increase in subscription cost for long-time users, Netflix may see some less-than-happy customers, however, Netflix continues to offer high quality shows and movies that other streaming subscription providers may not offer. They will have to figure out something to keep their edge, though.