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Amazon is Planning to Spend Over $3 Billion on Audio and Video Content

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(Credit: Daniel Acker/Bloomberg via Getty Images ) The Amazon.com Inc. Prime logo is displayed on computer screens for a photograph in Tiskilwa, Illinois, U.S., on Wednesday, April 23, 2014. Amazon.com Inc. is scheduled to release earnings figures on April 24. Amazon.com Illustrations Ahead Of Earnings Figures
January 26
3:34 PM 2016

Amazon is planning to spend more than $3 billion for music and video content in its Prime service in 2016. As for now, Amazon has collected 54 million members in U.S. alone.

A recent report from Consumer Intelligence Research Partners (CIRP) revealed that Prime members in U.S. increased 35% in 2015 to 54 million. U.S. customers of Prime also spent about $1,100 a year in 2015, compared to about $600 a year from non-members.

However, CIRP estimated a slowdown in membership growth and membership renewal in 2016. Therefore Amazon wants to make sure its members renew their membership and stay as a loyal customers. Especially, compared to last year growth of 54%, the membership increase in 2015 is showing a downtrend.

Business Insider reported what Mike Levin, Partner and Co-Founder of CIRP said in the report, "While Amazon Prime continues to grow nicely, growth slowed somewhat compared to earlier periods."

Market Watch reported that Amazon Prime members also spent less than 2014 of $1500 on annual average, while non members spent $625 in the same year. A decline spendng in both members and non-members showed a need of refreshment for Amazon Prime.

In its plan to spend more budget on audio and video content, Time reported that Amazon expect to expand its service to a lower-income customers, beyond its core wealthy customers base.

Amazon wanted to expand its customer base. It is because once a member subscribe to Amazon Prime, normally the member would spend a disproportionately high amount of money in Amazon content

Amazon Prime was launched in 2005 as a $99 annual fee membership subscription service from Amazon. It offers its members access to vast amount and variety of contents, as well as Amazon e-commerce service. The Seattle-based company started the service as an expansion to its e-commerce business.

It turned out that Amazon Prime has done impressively well. One phenomenal growth occured in 2015 Christmas season. During that time, within a single week, 3 million new members in the U.S. subscribed for Amazon Prime.

Since 2007, the company has extended its membership beyond U.S. market. Prime subscription is available in Germany, Japan, United Kingdom, France, Italy and Canada.

Its service includes free two-day shipping on millions of items sold in Amazon, instant streaming service of selected movies in Amazon Video, access to million of ad-free songs in Amazon Music, unlimited photo storage in Amazon Cloud Drive and access to thousands of books in Kindle libraries.

In facing the 2016 challenge, Amazon prepares to invest more in its Amazon Prime service. The planned $3 billion spending for music and video content is expected to increase more subscription from new members, and more purchase from existing members.

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