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Consumers cooler to Amazon Prime than thought, report says

Analysts said Amazon's subscription shopping offer would be a big hit with consumers--but Bloomberg says the numbers tell a different story.

Screen shot by Greg Sandoval/CNET

Amazon has failed to sign up customers to its Prime service as fast as analysts had predicted, Bloomberg reported today.

Citing unnamed sources, the news service said that as of October, Amazon Prime had at most 5 million subscribers. Analysts predicted that Amazon would have 10 million Prime members at this point, according to the report.

Bloomberg didn't offer any reason for the shortfall. An Amazon spokesperson was not immediately available.

Prime costs $79 per year. Subscribers get free two-day shipping on their purchases as well as unlimited access to a limited pool of movies and TV shows that the company will stream to Web-connected devices.

Some observers, including me, have expected Prime to help Amazon compete against Netflix, the Web's No. 1 video-rental service. If the video offering was just $79, it would be less than the $92 Netflix users pay per year for streaming video--although Netflix's selection of TV shows and movies is much larger.

If Bloomberg's report is accurate, the numbers indicate that the Prime offer isn't yet sweet enough for consumers.

Another sign that Amazon may be struggling to build an audience came from Netflix. The company said last month in its fourth-quarter earnings report that it isn't feeling any competitive pressure from Hulu Plus or Amazon.

"Both Amazon and Hulu Plus's content is a fraction of our content," Netflix CEO Reed Hastings wrote in a letter to investors in January. "We believe their respective total viewing hours are each less than 10 percent of ours."