Amazon just announced a new partnership with HBO that will let Amazon Prime members stream classic HBO content as part of their $US99 yearly subscription.
Why is Amazon paying for more exclusive content? Topeka Capital analysts Victor Anthony explains it in one paragraph:
Amazon’s successful foray into devices (e-Readers, tablets, streaming boxes, and a rumoured phone) is about driving digital media content sales, but also about driving customers to Amazon Prime, whose members purchase more frequently and in greater dollar amount than non-members. The addition of HBO’s content to Prime Instant Video should attract the binge watch fanatics, drive more Prime members, and lead to lower churn. This is a win for Amazon.
Amazon Prime, with “at least 20 million” subscribers, is about more than just video. It includes free two-day shipping for many items on the site. Prime members tend to spend significantly more money than non-Prime members.
By beefing up its video content, Amazon is making Prime subscriptions more attractive to potential members, and the more people who sign up for Prime, the better for Amazon.