A Survey of Amazon Prime Membership



Amazon added 5.0 million Prime subscribers

When Amazon (AMZN) released its 3Q17 results, it stuck to its tradition of not disclosing its Prime membership. However, according to new data from research firm Consumer Intelligence Research Partners (or CIRP), Amazon Prime membership grew in 3Q17.

CIRP estimates that Amazon finished 3Q17 with 90.0 million Prime members in the US (SPY), implying that the company gained 5.0 million Prime subscribers between June and September. Prime membership at the end of 2Q17 was estimated to be 85.0 million.

A $4.5 billion content budget

The chart above illustrates how Prime membership has changed since 3Q16. Amazon Prime members enjoy a variety of perks, including free shipping on a range of items as well as video and music entertainment. Prime subscribers pay $99.00 per year or $10.99 per month to utilize these perks.

The Prime program is central to Amazon’s aggressive investment in high-quality, original videos for its Prime Video service to increase Prime membership’s appeal. According to analysts at J.P. Morgan (JPM), Amazon could spend $4.5 billion on content acquisition this year, compared with Netflix’s (NFLX) $6.0 billion content budget.

Alibaba came up with its Prime challenger

A number of Amazon competitors have developed their own versions of the Prime program, as they view this membership program as a way to drive customer loyalty. Earlier in 2017, Alibaba (BABA) launched a Prime-like service called LiveUp through Lazard, its Southeast Asia subsidiary.

More From Market Realist