In its recently released US Subscription Video Landscape 2019 white paper, eMarketer claims that Amazon Prime Video had 26 million users and drove $2.8 billion in revenue in 2018. It didn’t have that many users, and it is virtually impossible to say just how much revenue for which it is responsible.
The problem with accounting for Amazon Prime Video
eMarketer says that there 26 million Prime Video subscribers. It probably obtained that number from a Reuters report released early in 2018. Reuters had allegedly obtained some Amazon internal documents providing details on video usage. The Reuters piece said:
“The documents also show that Amazon’s U.S. audience for all video programming on Prime, including films and TV shows it licenses from other companies, was about 26 million customers.”
eMarketer then took the amount it costs to subscribe to the standalone Prime Video service – $8.99 – to calculate the total Prime Video subscriber annual revenue as $2.8 billion (26 million X $8.99 X 12 months = $2.8B.) Unfortunately, you cannot assume the value of a Prime subscriber that watches Prime Video is the same as a subscriber to the standalone service.
The value of Prime Video to a Prime subscriber
In a 2016 study, IBM found that 75% of Prime subscribers also used the video services.[i] However, only 14% said the reason they subscribed was to watch Prime Video. The rest signed up for the shopping benefits.
At the time of the IBM survey, Amazon did not allow people to sign up for Prime Video as a standalone service. So, does that mean the 14% that signed up for Prime to watch the video would have signed up for a standalone product? No. Prime costs $119 a year, or $13 a month and still represents a good value assuming a video-oriented user plans to shop in Amazon’s store.
The simple truth is that you can’t ascribe $8.99 per month in subscriber revenue to Prime Video users.
The only group of Prime Video users that you can ascribe specific subscription revenue to is those that signed up for the standalone product. Amazon has never stated how many people have done this, and the numbers are likely very low.
Prime Video has more than 26 million users
TiVo found that 70% of consumers had access to at least one subscription online video service at the end of 2018. Further, a nScreenMedia survey taken at around the same time found that half of subscription service users accessed Amazon Prime Video. In other words, around 35% of adult US consumers were using Amazon Prime Video at the end of 2018.
There are about 250 million adults in the US. The 35% of them that are Prime Video users equates to 88 million. However, we should assume that a single Amazon Prime account is shared within a household to watch Amazon Prime Video. Most viewing of SVOD services takes place on the connected TV, and in this environment, sharing is unavoidable most families share the same connected TV device. The family subscriber to Amazon Prime sets up Prime Video on the Roku or Fire TV with their account, and everybody watches Prime Video through it. Since there are, on average, 2.5 people per home in US households, the 88 million Prime Video users probably comes from about 35 million Prime accounts.
It could be, as Reuters claims, that Amazon did have 26 million active Prime Video users at the beginning of 2018. However, by the end of the year, it likely had many more.
Why it matters
There is no way to accurately ascribe a revenue number to Prime Video users since the vast majority of users receive the service as an added benefit to Prime membership.
Amazon likely had around 35 million Prime Video users.
[i] IBM Cloud Video, Everybody Wants to Rule the Streaming World, IBM Cloud Video, Q1 2017, p2