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Amazon plans Prime price hike

Amazon said that it is considering upping the price of its Prime subscription service in the US by between US$20 (€14.80) and US$40 per year, to respond to increased costs and usage.

Speaking on the firm’s fourth quarter earnings call at the end of last week, Amazon’s chief financial officer, Tom Szkutak, said that it was investing “very heavily” in its US VOD service Prime Instant Video – part the Prime subscription offering – but denied this was the reason for the proposed price increase.

“We have not done a price increase in nine years. Shipping costs have gone up if you look back very considerably over the nine-year period,” said Szkutak.

However, he added that more recent additions to its prime offering – including the Kindle e-book ‘lending library’ and Prime Instant video were “certainly costly.”

Amazon launched Prime in the US nine years ago, offering unlimited two-day shipping on 1 million items for an annual price of US$79. It has since rolled the service to more countries, though additional features, like Prime Instant Video, remain a domestic concern.

Asked whether the potential pricing change of Prime in the US would lead Amazon to consider offering Prime Instant Video as a separate service, Szkutak said “I wouldn’t speculate what we would do or not do going forward but we like the service that we have.”

In the UK and Germany, Amazon currently offers a standalone VOD service under the Lovefilm brand.

Amazon did not break down its Prime member numbers, but said “tens of millions” subscribed to the service worldwide. It also said that its Prime Instant Video selection increased from 33,000 to more than 40,000 movies and TV episodes in 2013.

For the fourth quarter of 2013, Amazon said that its net sales increased 20% year-on-year to US$25.59 billion. Operating income increased 26% to US$510 million, while net income was US$239 million, compared to US$97 million in Q4 2012.