Thursday, November 26, 2015

Amazon Prime Seeks To Master The Bundle

I have been known to say that history repeats itself; for good and for bad.  And in the world of marketing, a good idea is a good idea, often repeated under various creative strategies.  One such notion is the strategy of bundling, the art of combining items into a single, larger package.  Cable television did it quite successfully, first in bundling cable channels together and offering a large selection of differentiated networks at one low price, and again in creating the triple play of cable, phone, and data at one competitive price. 

Amazon has repeated that strategy with the creation of Amazon Prime, a bundle of services including same day delivery, cloud storage of photos, special offers as well as Prime Music and Prime Instant Video, all at a low annual fee.  And while the centerpiece is free delivery, the additional pieces help to create strong added value.  And the strategy seems to be working.

But delivery alone might not be enough and the value of content cannot be minimized.  Amazon seeks to strengthen its Instant Video subscription with original shows as well, including the Emmy winning Transparent. Now,Amazon Prime seeks to expand its Prime bundle with other subscription services.  According to Variety, "The retail giant has been pitching the idea to add third-party video subscription services to its Prime subscription service to TV networks and online video services, offering them Amazon’s huge Prime customer base with its existing billing relationships as an incentive."  That might suggest that services like HBO Now, Showtime, or perhaps even Hulu could be added to their bundle.  As cable has learned, the bigger the bundle, the more value perceived, the better to attract new subscribers to the service.

But cable has also learned what can happen when too big causes the bundled price to rise and for consumers to start cutting the cord.  For cable, it has led to the new term of the skinny bundle, with a lesser number of aggregated services.  As Amazon plots its growth strategy, let it also recognize that it can sometimes get too big.  Controlled growth, meaningful value, at a competitive price.  So far, Amazon Prime continues to make itself a valuable commodity, but if it leads to price increases then it can also hurt your efforts.