Netflix tests $6.99 subscription fee to compete with Amazon Prime

Netflix tries out a lower tier subscription price to better compete with Amazon in 2014.

 Netflix tests $6.99 subscription fee to compete with Amazon Prime

There are more than one video-on-demand services out there, but so far it seems like Netflix is the pack leader.  Even so, big internet names like Amazon are threatening to slow down the growth of the popular video streaming service.

To keep up with its competitor, Netflix is testing out a new $6.99 per month service that is meant to keep the Netflix brand in the consciousness of consumers throughout 2014.

“The new plan likely has at least two goals: 1. Attract the more value conscious consumer.  2. To more effectively compete with Amazon Prime,” said Sterne Agee analyst Arvind Bhatia.

Amazon currently offers its Prime service for $79 a year, which includes access to Prime Instant Video streaming.  Divide that fee by 12 the subscription price per month comes to $6.58 a month, which is slightly cheaper than Netflix’s new $6.99 (one viewer at a time) service.  The Amazon Prime service also comes with free 2-day shipping for goods purchased through Amazon.

Netflix is continuing to search for growth avenues, and garnering more subscribers via a cheaper subscription fee may lead to just that.  Bhatia, however, noted that the new model may also cannibalize the old service as subscribers can easily cancel their current subscription and re-subscribe to the lower-priced deal.

Source: USAToday

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