Crunching the numbers: Amazon Prime vs. Netflix

Amazon Prime versus Netflix: which is the better value? Actually, it's no contest--but that's because you're comparing apples and oranges. Find out why Prime has the potential to rule the world.

Amazon Prime offers a lot of bang for your 80 bucks. But is it really the best value?
Amazon Prime offers a lot of bang for your 80 bucks. But is it really the best value? Screenshot by Rick Broida

To my thinking, the most interesting aspect of Amazon.com's new Kindle Fire tablet is not the hardware, nor even the price. It's Amazon Prime, the $79-per-year service that delivers, among other things, video and e-book content to the device.

That $79 outlay may seem like a lot, but let's crunch the numbers a bit. For starters, that breaks down to $6.58 per month, less than what you'd pay Netflix for its video-streaming service. Of course, the latter's $7.99 monthly fee nets you considerably more content--but I'll come back to that.

Also included in your Prime membership: free e-book borrowing . This sounds a bit better than it is, as Amazon currently limits you to just one book per month. What's more, the Prime lending library has only about 5,000 titles, at least for now.

There's some decent stuff in there, including the "Hunger Games" trilogy, "The Hangman's Daughter," and "Water for Elephants." But overall I'd have to describe the selection as disappointing, as it contains mostly items I've already read or don't want to read. (Of course, that's just me.)

On the other hand, considering that the typical Kindle e-book costs $9.99, you're effectively getting $120 of books as part of your $80 Prime membership. And that's not including all the other stuff.

In addition to books and video, Prime gives you its original raison d'etre: free two-day shipping on virtually everything you buy. No limits. And if you need something overnight for a gift or whatever, you pay just $4.

Now, let's say you order just one item per month from Amazon, and your orders don't end up qualifying for free Super Saver (aka slow-boat) shipping. Even if you paid just $5 for standard shipping each time (an amount that could easily be much higher, depending on what you're buying), that's $60 per year.

Time to review. A Netflix streaming subscription costs $96 annually. Twelve e-books would cost you around $120, and shipping charges for everyday items could easily amount to $60, if not more. That's $276 per year--more than three times the price of an Amazon Prime membership. There's value here, people.

Of course, I'm presuming that you'll find enough reading, viewing, and shopping material to make it worthwhile. But even if you're only a light consumer of all three, you still stand to come out ahead.

That said, here's what Amazon needs to do to make Prime more of a slam-dunk. First, expand the lending library--significantly. There should be a minimum of 50,000 titles, not 5,000. Second, make the available titles easier to browse. At the moment, I can find no way to view just the lending-library books (on the Amazon Web site, anyway).

Third, keep building the video library--it's getting a little better all the time--but make it easier to browse. The current interface for perusing Prime-eligible video is embarrassingly bad, and annoyingly hard to find.

Finally, offer a monthly payment option. For someone who just plunked down $200 on a Kindle Fire, another $80 might be tough to swing. How about $6.99 per month, which you can still tout as "less than Netflix!" while offering unparalleled other services?

I think Amazon Prime has the potential to be a game changer. It's already an impressive value, and arguably a must-have for Kindle Fire owners. All that remains is for Amazon to beef up the content and improve the user experience.

What are your thoughts on Prime? Worth the money? Not quite ready for (sorry) prime time? Share your thoughts in the comments.

 

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