Amazon confirms it has 20M+ Prime subs


Macquarie's Ben Schachter states Amazon (AMZN +0.9%) has confirmed it now has 20M+ Prime subscribers. That figure is soundly above the 16.7M estimated by CIRP in December. Amazon declared last week it had "tens of millions" of Prime subs, but gave no precise number.

The company's confirmation suggests Prime is now on a ~$1.6B/year subscription revenue run rate. Of course, Amazon likely cares far less about subscription revenue than about the elevated spending activity (estimated by CIRP to amount to $1,340/user) of Prime subs.

Amazon's figure also means 20M+ accounts now have access to Prime Instant Video, which the company just began marketing.

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Comments (27)
  • canigetanamenooneused
    , contributor
    Comments (327) | Send Message
     
    As usual, incomplete information coming from AMZN.

     

    How many of the $20+ million members are on their 6 month free trial, on Amazon Student which costs $39/yr compared to $79/yr for regular Amazon, or on Amazon Mom (don't know the price for this one).
    7 Jan 2014, 12:03 PM Reply Like
  • Gary J
    , contributor
    Comments (10325) | Send Message
     
    Probably the same percent as when they announced 10 (no $) M+ so it's all relative. 20M+ is the key number and it's awesome!
    7 Jan 2014, 12:35 PM Reply Like
  • Atkins
    , contributor
    Comments (1049) | Send Message
     
    The distinction between free trial and regular cost is irrelevant. The market has made it clear that it simply does not care about finer details. Bezos is the boss, and WS says that's enough.
    7 Jan 2014, 02:29 PM Reply Like
  • Gary J
    , contributor
    Comments (10325) | Send Message
     
    The wise old guys who do best at the track bet on the jockey, not the horse.
    7 Jan 2014, 07:17 PM Reply Like
  • canigetanamenooneused
    , contributor
    Comments (327) | Send Message
     
    @Gary J: So, what was distribution when they had 10 mill subs?
    8 Jan 2014, 03:47 PM Reply Like
  • Gary J
    , contributor
    Comments (10325) | Send Message
     
    Same as now - you still don't get it
    8 Jan 2014, 04:32 PM Reply Like
  • canigetanamenooneused
    , contributor
    Comments (327) | Send Message
     
    @Gary J: so basically they have never released a breakdown of their Student, free trial etc. subscribers. That's what I had already guessed anyways.
    8 Jan 2014, 05:09 PM Reply Like
  • Gary J
    , contributor
    Comments (10325) | Send Message
     
    If your company was growing by leaps and bounds and has plenty of investor backing would you release any more than you had to? I know I would not.
    8 Jan 2014, 05:14 PM Reply Like
  • canigetanamenooneused
    , contributor
    Comments (327) | Send Message
     
    @Gary J: they are growing revenue wise, at least for now, which al most any company can do if they didn't care about profits. ya, they have been able to ride the momentum with their trickery so far, but can't say the same thing when their revenue growth slows down and investors start looking for profits.
    8 Jan 2014, 07:24 PM Reply Like
  • Gary J
    , contributor
    Comments (10325) | Send Message
     
    Yeah been hearing that for 3 years now. I know, this time it's different. lol
    9 Jan 2014, 07:24 AM Reply Like
  • DanoX
    , contributor
    Comments (3461) | Send Message
     
    It's just more Smoke and Mirror's as usual, pump it up baby.
    7 Jan 2014, 12:35 PM Reply Like
  • DianeLee
    , contributor
    Comments (368) | Send Message
     
    Just personal observation, but I began on 6 mo free trial, pleased with services, bought 1 yr Prime and will renew. Great customer satisfaction, and yes, I spent more with AMZN even so. Guessing many will buy and renew Prime.
    7 Jan 2014, 12:40 PM Reply Like
  • Hayweed
    , contributor
    Comments (392) | Send Message
     
    Question is does the prime user make any money for Amazon.
    You get free shipping which has to cost them a ton of money and they give you a service that Netflix sells for $108 a year.

     

    If the end user averages $1340 a year with a 3 margin the person is only bringing in about $40 of profit before operating expenses. Thus to me, Amazon is all smoke and mirrors with no profit to be found.
    7 Jan 2014, 12:46 PM Reply Like
  • DianeLee
    , contributor
    Comments (368) | Send Message
     
    The difference is in the expanded and very efficient marketing system of Amazon. My FIRST source for ANY new item is nearly always Amazon. Comparison to Netflix is only part of the story. As an avid reader, AMZN draws satisfied customer responses, a great system for identifying preferences, constant "suggestions" with free download by Whispersync, free text-to-voice. Many mailed items free delivery, TV and movie choices. The complete marketing system is amazing and draws brand loyalty. Sometimes I think of it as a 'frequent buyer' club. ;)
    7 Jan 2014, 05:01 PM Reply Like
  • canigetanamenooneused
    , contributor
    Comments (327) | Send Message
     
    It has been the same way for me too for a while, but I have begun to question. Like, right now, I was looking to buy a book (ended up getting it from the library) and the price at Amazon, half.com and ebay were within $0.50 of each other. Where is the competitive advantage for Amazon?
    8 Jan 2014, 05:04 PM Reply Like
  • Jeffry Chmielewski
    , contributor
    Comments (599) | Send Message
     
    At 20mm subscribers, Prime revenues are still below the annual Netflix content spend. And then they give you free 2-day shipping as well. How can they give you both for less than the cost of an annual Netflix subscription and make money?

     

    Oops, totally forgot. Profits don't matter for Amazon. Only having a negative cash conversion cycle and borrowing cash from suppliers as accounts payable matters. 'Cash flow' no matter how unsustainable is the only thing that matters.
    7 Jan 2014, 02:07 PM Reply Like
  • DianeLee
    , contributor
    Comments (368) | Send Message
     
    Probably true, IF you compare only to Netflix content speed, etc. Consider possible "loss leader" as established strategy to draw customers to actual content of physical products. Look at the AMZN site, including clothing, shoes, electronics, jewelry, etc. Think: expanding markets.
    8 Jan 2014, 12:37 PM Reply Like
  • Jeffry Chmielewski
    , contributor
    Comments (599) | Send Message
     
    @DianeLee - The problem with Amazon is that every Amazon business is a loss leader.
    8 Jan 2014, 02:00 PM Reply Like
  • canigetanamenooneused
    , contributor
    Comments (327) | Send Message
     
    @Jeffry: In an earlier comment you had mentioned that AMZN has 75 day cash conversion cycle, where is this info mentioned on their quarterly statement?
    8 Jan 2014, 03:53 PM Reply Like
  • Jeffry Chmielewski
    , contributor
    Comments (599) | Send Message
     
    Accounts Payable days are 75. You can calculate them yourself from the data in the 10Q, although Amazon usually discloses them on the conference call, and they disclose them annually in the 10K. A/P days are only one component used to calculate the cash conversion cycle, which also requires Accounts Receivable and Inventory.
    8 Jan 2014, 04:53 PM Reply Like
  • canigetanamenooneused
    , contributor
    Comments (327) | Send Message
     
    @Jeffry: thanks for the info.

     

    Also wondering if you know about how to get notifications when some one replies to my comments?
    8 Jan 2014, 05:05 PM Reply Like
  • Johnwoods41
    , contributor
    Comments (177) | Send Message
     
    So how many prime members do you need to start making a profit, clearly 20 million isn't enough, or is it the case that they are loss making and the more you have the more you lose?
    7 Jan 2014, 03:39 PM Reply Like
  • Thalidomide Baby
    , contributor
    Comments (1199) | Send Message
     
    Amazon is going to have more members than Costco soon.
    7 Jan 2014, 08:46 PM Reply Like
  • DanoX
    , contributor
    Comments (3461) | Send Message
     
    But doesn't Cosco make a profit?
    8 Jan 2014, 01:08 AM Reply Like
  • SyrPhil
    , contributor
    Comments (29) | Send Message
     
    Profit is the last thing that AMZN should worry about.
    8 Jan 2014, 03:16 AM Reply Like
  • DianeLee
    , contributor
    Comments (368) | Send Message
     
    At the end of the day traders like profits....and customers like good deals. Happy customers always build the client base and provide good profits to well-managed companies.
    8 Jan 2014, 01:07 PM Reply Like
  • canigetanamenooneused
    , contributor
    Comments (327) | Send Message
     
    not day traders, any investors likes profits, otherwise, why exactly are you putting your money in stocks???

     

    True, AMZN is a good customer-oriented company but it's definitely not making any profits right now.
    8 Jan 2014, 03:54 PM Reply Like
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