Can Amazon Prime become more popular than cable TV?
According to estimates from Morningstar, the number of households that subscribe to Amazon Prime is on track to overtake the number of households that subscribe to cable TV. Morningstar says that 79 million U.S. households now have an Amazon Prime subscription, up from 66 million at the end of last year. Meanwhile, S&P global predicts that 90 million U.S. households will be paying for cable or satellite TV throughout 2017.
Amazon Prime is catching up to Pay-TV
The graph above charts clear trajectories for both services: one is declining, the other rising rapidly. One explanation is the growing popularity of Amazon Prime’s streaming video on demand (SVOD) service. Consumers increasingly prefer the convenience of SVOD services that let you watch your favourite show when you want, where you want, and on any internet-connected device. As the content offerings on various SVOD services have improved, these platforms have become more and more popular, and Amazon is a leader in this area: it has won Oscars for its original films, and holds numerous exclusive titles in its portfolio that are taking the entertainment world by storm (American Gods, Preacher).
Amazon’s share price is up by 32% so far this year
SOURCE: Yahoo Finance
Amazon Video aside, however, the main reason people subscribe to Prime is the fast delivery of products. Video, along with numerous other services, simply rounds out an incredibly attractive total package. There is some evidence that Amazon needs to do more to capture more Prime members in the coming year: 80% of wealthy U.S. households are already members. However, with new offerings targeted directly at lower-income Americans, Prime’s trajectory seems on fairly safe ground: the next few years could be groundbreaking for the company all over again.
Dominion holds Amazon in its Global Trends Ecommerce Fund.
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