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The No. 1 reason people subscribe to Amazon Prime is…

The movies and shows available via Amazon’s video service generate lots of buzz, but they are by no means Amazon Prime’s biggest draw.

Seventy-nine percent of Amazon Prime users cite free shipping as the primary reason they subscribe to the service, according to research by The Diffusion Group. Only 11% cite Prime Video, with a collective 10% citing Prime Music, Photos, Reading, Twitch, or other benefits.

More than half of U.S. adult broadband users currently subscribe to Amazon Prime, the report noted. When asked which of the many benefits of Prime drives their loyalty to the service, eight in 10 chose free shipping of retail purchase.

“While Amazon Prime is building robust audiences in video, music, and gaming," said Michael Greeson, president and director of research, The Diffusion Group. "Prime is first and foremost about developing more and broader retail relationships, and free shipping is key to that mission. That is where the real value of Prime lies."

Adding high-quality digital media to Prime has certainly sweetened the deal and brought many new subscribers into the mix, Greeson added.

“Once they begin to buy more merchandise, however, service value appears to shift from media to free shipping,” he explained. "This is not to diminish the value that digital media services add to the Prime equation, but it puts it into perspective relative to retail."

According to Greeson, the retail benefits of Amazon Prime serves to differentiate it from media-only competitors like Netflix and Hulu (video); Spotify and Apple (music); and Mixer, Owler, and Caffeine (gaming).

“The competitive threat that Amazon poses to the media industry is unique," he said. "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."
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