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How Amazon's Original Content Increases Prime Memberships
By: Motley Fool | March 23, 2018

The streaming video industry has long been something of a black box. Linear TV gauged the success or failure of its programming by the percentage of viewers compared to its peers. Streaming services, on the other hand, have been notoriously secretive about their viewership data. Streaming pioneer Netflix (NASDAQ: NFLX) has repeatedly said that ratings are irrelevant because they're tied to an outdated advertising paradigm -- which the company famously doesn't use on its platform.

Amazon.com (NASDAQ: AMZN) is Netflix's biggest rival in the space via its Prime video offering, and the company has also been reticent to divulge viewership data for its original programs. It has also never revealed subscriber data for its Prime loyalty program, or how many people actually avail themselves of the streaming video service it offers free of charge to Prime members.

Now, some of those numbers may be out of the bag.

We finally have insight into Amazon's streaming video numbers. Image source: Getty Images.

A rare glimpse

Amazon had added an extra 5 million worldwide Prime members by early 2017, due to the strength of the company's slate of original programming, according to a report by Reuters. Internal documents cited in the report show that Amazon's streaming video service attracted an audience of about 26 million customers. By comparison, Netflix reported 117 million subscribers worldwide in its most recent financial release.

The table below shows how Amazon evaluates the success or failure of its streaming programs. The cost per first stream determines how much the company has spent to get a customer to join Prime. In order to arrive at this metric, Amazon adds the cost of the marketing and production for each show, and divides that by number of viewers who stream that program first after becoming members. The lower the cost per first stream, the more effective the show was at attracting viewers.

http://fingfx.thomsonreuters.com/gfx/rngs/AMAZON.COM-RATINGS/0100614J29T/index.html

Amazon credits a program with attracting a customer to begin or continue a Prime subscription if the show is the first one a viewer streams after renewing or initially signing up. This indicates that a series like The Man in the High Castle drew new members to Prime at a cost of $63, far below the annual fee of $99 collected from each member.

https://finance.yahoo.com/news/amazon-apos-original-content-increases-183300227.html

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