Bad News for Amazon Prime: People Are Only There for the Shipping

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While Amazon Prime Video is the second most popular subscription video offering (after Netflix), people aren't signing on for the video. Data released today by the researchers at The Diffusion Group (TDG) show an overwhelming 79 percent of Amazon Prime subscribers cite free shipping as the top reason why they signed up. Only 11 percent say Prime Video was the key reason, followed by 4 percent who said Prime Music.

While getting an on-demand video library certainly "sweetened the deal" for many subscribers, TDG notes, the offering's central value is in shipping and retail. Amazon is actually losing money on its media offerings so it can bolster its retail business.

"The competitive threat that Amazon poses to the media industry is unique," says Michael Greeson, TDG's president and director of research. "Video, music, and gaming services are largely loss leaders to Amazon's cash-cow retail business. This strategy continues to enable the company to disrupt not only established media verticals but a widening array of other goods and services."

While Amazon originals like "The Man in the High Castle" and "The Marvelous Mrs. Maisel" aren't convincing many to sign up, Amazon is successfully up-marketing viewers once they're there: A May report from TDG showed that Amazon Prime Channels, the company's video service aggregator, has been highly successful. In fact, HBO gets 53 percent of its direct-to-consumer sales through Amazon Prime Channels.

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