Amazon Reveals Fee Hike For Prime Memberships
Amazon used the release of its Q4-2021 financial report to reveal it is planning to increase the subscription fee 22% for its Amazon Prime video and shipping membership services in the U.S.
The international e-commerce giant made the disclosure at the same time that it announced revenue for the period had increased 9% to $137.4 billion, and profits reached $14.32 billion for the three-months ended Dec. 31.
The company forecast sales of between $112 billion and $117 billion for the current quarter.
A monthly Amazon Prime subscription is to increase $2 per month from the current $12.99 to $14.99, (or to $139 for an annual membership, up from $119).
Under the plan, U.S. Prime members will also get access to the NFL’s Thursday Night Football games next season as part of the expanded Prime Video membership benefits.
The Prime membership fee hike is the company’s first since 2018 and is scheduled to go into effect on February 18th for new Prime members, and on or after March 25th for current Prime members.
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Amazon said the increase reflects the higher costs for shipping and service deliveries. In addition to providing premium video and music streaming, a Prime membership includes free shipping on select item purchases, special member promotional offers, cloud storage, discounts on groceries purchased from Whole Foods, and other benefits.
“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 the company’s earnings release.
Brian Olsavsky, Amazon’s CFO, said in a conference call with analysts that is difficult to predict how or if the increased fees will impact the company’s membership count, given the value of the additional benefits offered today compared to the last time fees were raised.
“When we look to do price increases, we take it very seriously. And we’re always balancing the value to customers versus the cost of supplying benefits,” Olsavsky said.
Meanwhile, video streaming rival Netflix recently announced it too has raised membership fees for U.S. customers for the first time since 2020. The new Netflix rate for a basic plan (one screen at a time; no HD) increased $1 per month to $9.99, the standard plan (two screens, with HD) increased $1.50 to $15.49 per month and the 4K plan (four screens plus 4K) increased $2 per month to $19.99.
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By Greg Tarr
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