Rising Prices for OTT Video

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2Q 2014 | IN-1018823


Amazon Prime Price Increase; Netflix on the Horizon


In March 2014, Amazon increased the price of its Prime service from US$79 annually to US$99, short of the US$119 price the company had previously considered. The price increase was said to mostly account for increasing shipping and fuel costs, but the rising rates to secure OTT content and original programming surely went into the optimization model as well. Netflix has also tinkered with its pricing by adding an US$11.99 per month price tier that supportsfoursimultaneous streams, while leaving intact its main US$7.99 tier that supportstwostreams.  This is a more consumer-friendly increase than the last significant price hike, which saw the company separate streaming and physical media.

The inclusion of 2-day shipping with Amazon Prime obscures the value assigned to streaming, but it is becoming an increasingly important facet of the company's long-term strategy. Netflix, meanwhile, is seeking to find ways to increase...

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