08/06/2016   Richard Broughton
Amazon Prime driving Amazon's retail growth, permits content subsidisation

Amazon Prime customers have an increased propensity to spend on products available via the Amazon store. The removal or reduction of purchase barriers such as delivery costs and shipping time, combined with the fact that Prime customers spend more time within Amazon's website or device ecosystem means that Prime subscribers typically spend over twice as much with Amazon as customers without Prime. This increased spend, combined with Prime’s ever-expanding customer base means that 40% of Amazon's retail revenue was derived from Prime customers in 2015, by Ampere’s estimates. Video is a crucial component of Amazon's drive to convert customers into higher-spend Prime subscribers, and the enhanced retail spending of Prime subscribers means that Amazon can extensively subsidise content acquisition to improve Prime's appeal - by as much as $130 per new or retained Prime customer.

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