E-commerce leader Amazon.com Inc AMZN is using a series of acquisitions and partnerships to increase the offering of its Amazon Prime subscription service. Here’s a look at some of the benefits Prime subscribers get and what might happen along the way.
What happened: Amazon announced a partnership with Grubhub on Wednesday. The partnership will allow Amazon Prime members to receive a free, one-year Grubhub+ membership and receive $0 delivery fees from restaurants on the Grubhub platform.
Grubhub+ normally costs $9.99 per month for the subscription food delivery service.
Under the terms of the partnership, Amazon is buying a 2 percent stake in Grubhub with warrants that give the company the option to acquire another 13 percent of the company.
The new feature continues to add to the benefits offered by an Amazon Prime membership.
Launched in 2005, Amazon Prime includes benefits such as free two-day shipping, TV and movie streaming, music streaming, free games, unlimited photo storage, and available books to read. Prime memberships also offer savings on pharmaceuticals at over 60,000 pharmacies, including Walgreens Boots Alliance WBA and CVS Health CVS.
Amazon raised the price of its Prime membership earlier this year from $12.99 to $14.99 for a monthly subscription and the annual membership from $119 to $139. This was the first price increase for Amazon Prime since 2018.
As Amazon raises its prices and competes with more companies offering subscription services, the company can continue to offer more deals and exclusive offers to attract new customers and retain existing subscribers.
Related: Amazon Q1 earnings highlights: Mixed earnings, lower guidance sends shares tumbling
What could be next: Amazon uses acquisitions to strengthen its offerings for Prime customers. This includes the acquisition of Whole Foods and Audible. The tech giant’s acquisition of film and TV studio MGM could boost the company’s Prime Video offerings in the future.
Here are the sectors and offerings Amazon can target to expand its Prime benefits:
Increased Game Bonuses: One area where Amazon has seen growth recently is the Amazon Games segment. The free online game “Lost Ark” was the second most played game of all time after its release on Steam and had over 20 million users.
Prime membership comes with gaming perks like free games and a free Twitch subscription. Amazon can go all in on its gaming growth plan and work to partner with companies like Sony Group Corp SONY or Microsoft Corporation MSFT to offer a monthly subscription or get some games on the Amazon Games network.
Increasing sports content: Amazon is among the streaming companies moving forward with plans to grow through sports media rights deals. Amazon has Thursday Night Football coverage as part of an 11-year deal beginning with the 2022 NFL season. Amazon is likely to bid for more sports content in the future.
Movie theater deals: With the MGM acquisition, Amazon could have a lot of streaming content available for its Prime Video customers. With some blockbuster movies in the lineup, Amazon may also decide to show some of the movies in theaters. Amazon may look to partner with a leading movie theater company such as AMC Entertainment Holdings AMC or Cinemark Holdings CNK.
Amazon can make movies exclusive to certain chains and in return get perks for its Prime customers like free movie passes or a movie theater subscription plan similar to MoviePass that some theaters offer.
Buying or partnering with Peloton: Earlier this year, rumors surfaced that Amazon was among the companies interested in buying Peloton Interactive’s connected fitness company PTON. With Peloton’s stock down significantly from its all-time highs and $3.5 billion market cap, Amazon may consider striking a deal with the company and offering monthly fitness memberships as part of its Prime memberships.
Other monthly subscriptions: With rising inflation, consumers may continue to reduce monthly bills. Some of the cuts typically involve items that are subscription-based and have monthly fixed costs, since the savings can be recognized immediately compared to pledging to spend less at the grocery store.
Amazon may seek to acquire or partner with monthly subscription offerings such as meal kits, pet supplies, kid’s activity kits, and wine clubs and offer them for free to Prime members in exchange for an equity stake in the company, or offering them at huge discounts to Prime members in a move to improve the value of the monthly or annual cost of a basic membership.
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