Amazon to Raise Price of Prime Membership

Amazon to Raise Price of Prime Membership

BY ALEX WEPRIN | HollywoodReporter.Com

Troy Warren for CNT #Business

The price of an annual Amazon Prime membership will jump to $139 in the coming weeks.

As part of its fourth-quarter earnings report, Amazon announced that it would raise the price of Amazon Prime memberships for the first time in four years, citing investment in the company’s entertainment offerings, and its exclusive deal with the NFL to stream Thursday Night Football beginning next season, as among the reasons for the price hike.

The company said that the price of its annual membership will rise by $20 to $139, while monthly memberships will rise by $2 per month to $14.99. The company cited all of the additions to Prime since it last raised prices in 2018 in explaining the rationale.

“Since 2018, Prime Video has tripled the number of Amazon originals,” CFO Brian Olsavsky told analysts on the company’s earnings call, adding that “the continued expansion of Prime member benefits, and the increased use we have seen, along with increased costs and inflation,” played into the decision.

In addition to dramatically expanding its content selection since the last price increase, Amazon more than doubled its same day delivery options, and also launched benefits like pharmacy delivery, grocery benefits, and podcasts.

Amazon is set to pay the NFL about $1 billion per year for Thursday Night Football rights while also launching a number of high-profile shows through Amazon Prime Video, including the Lord of the Rings series, which is expected to cost about $500 million for its first season alone. The company has also rolled out shows like The Boys and Wheel of Time, which have also contributed to its growing entertainment expenses.

The company said that more than 200 million Prime members worldwide had streamed Prime Video shows or movies.

For Q4, the company had $137.4 billion in net sales, and $14.3 billion in net income. For the full year 2021, the company had net sales of $470 billion, and net income of $33.4 billion.

Amazon also quietly broke out its advertising revenue for the first time, revealing that it brought in $9.7 billion in Q4, and $31 billion for the year. Of course, that isn’t exactly an apples-to-apples comparison to advertising businesses from entertainment companies, with much of Amazon’s ad business including sponsored search results in its shopping product.

“We have looked at the proportion of other revenue that is advertising services, and I had been pretty much mentioning every quarter that a majority of that revenue was advertising revenue, and we decided that at a certain size we should really just break it out,” Olsavsky said.

Amazon’s Q4 earnings followed a disappointing Q3 where it missed Wall Street expectations and saw its profits cut in half as the company dealt with labor shortages and supply chain disruptions. This time around in, it beat those expectations.

In Q1 of 2022, the company says it expects net sales to be between $112 billion and $117 billion, with operating income between $3 billion and $6 billion.

“As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to Omicron,” Amazon CEO Andy Jassy said in a statement. “Despite these short-term challenges, we continue to feel optimistic and excited about the business as we emerge from the pandemic. When you combine how we’re staffing and scaling our fulfillment network to bring even faster delivery to more customers, the extraordinary growth of AWS with 40 percent year-over-year growth (and now a $71 billion revenue run rate), the addition of marquee new entertainment like The Lord of the Rings: The Rings of Power, Thursday Night Football and a plethora of new capabilities that we’re building in areas like Alexa, Ring, Grocery, Pharmacy, Amazon Care, Kuiper and Zoox, there’s a lot to look forward to in the months and years ahead.”

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By Troy Warren

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