The Amazon Prime Video service subscriber penetration rate hit 45% of connected U.S. homes to remain among the top three premium streaming services as of the third quarter of 2021, according to research firm Parks Associates.

The Park Associates Video Services Dashboard said 77.3 million U.S. households were Amazon Prime members in the first quarter of 2021 and around 71% use the Prime Video benefit that membership offers.

Amazon seeks to grow its Prime subscriber base by investing in original content for the Prime Video to keep its subscribers engaged, to encourage new subscribers, and to lure in cord-cutters and the new and growing cohort of service hoppers.

Parks observed that Amazon Prime Video saw growth just as the service increased its price.

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“Amazon’s Prime pricing rise, the fourth in its history, comes barely a month after Netflix raised its fees, while Hulu raised its prices last year,” stated Eric Sorensen, Senior Contributing Analyst, Parks Associates. “Amazon also debuted its Lord of the Rings trailer during the Super Bowl this year, so the firm obviously hopes the value they are bringing in content will offset any consumer reluctance to pay higher prices. With inflation and the cost of content on the rise, we will likely see more providers start to slowly raise their subscription prices, trying to find that balance between revenue growth and consumer value.”

Parks sees Amazon’s membership fee increase as being carefully vetted in a long-term strategy to generate more revenue from subscribers over time. Amazon gambled that passing along a $20 annual fee increase in the midst of supply chain disruptions and inflated shipping costs wouldn’t bring too many objections, coming as the first increase of its kind in four years.

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By Greg Tarr

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