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Amazon Prime is on pace to become more popular than cable TV

Estimates show that nearly as many U.S. households subscribe to Prime as to pay TV.

Jeff Bezos’ grand vision is playing out.
Asa Mathat

This post has been corrected.

Within a couple of years, more U.S. households could be subscribers of Amazon Prime than cable or satellite TV, according to recent estimates of Amazon’s popular shipping and entertainment service.

According to estimates from Morningstar, nearly 79 million people in the U.S. now have an Amazon Prime membership*, up from around 67 million at the end of last year. Based on Morningstar’s estimates of the average number of Prime memberships per household, that suggests about 66 million households have Amazon Prime memberships in 2017.

That compares to a projected 90 million U.S. households that will pay for cable or satellite TV this year, according to S&P Global.

According to these estimates, more U.S. households may have an Amazon Prime subscription than a pay TV subscription in as soon as two years.

How we got there: If the number of Amazon Prime households increases by roughly the same pace it has, on average, for the past four years — almost 12 million per year — the number of Prime households in 2019 would be around 89 million. Similarly, if TV households continue declines at their four-year average rate — losing 1.6 million per year — there would be about 87 million pay TV households in 2019.

The implication here is not that Amazon’s Prime Video service is more popular than TV; the main reason most people subscribe to Amazon Prime is still the fast delivery of products.

But it is an indication that Prime is moving toward becoming a “no-brainer” for more than just wealthy Americans. To that end, Amazon has been courting lower-income American households with discounts for those on government assistance, as well as a monthly payment option for those who don’t want to cough up $99 for an annual subscription.

These growth tactics are important, since more than 80 percent of America’s wealthiest households already pay for Prime. And Amazon knows that Prime is the core of its retail business: Prime members spend more in a year than non-Prime members do, shop more frequently than others and price-compare less, according to studies.

* Amazon doesn’t disclose Prime member numbers, so Morningstar’s estimates are based on an analysis of Amazon’s cash-flow statement. There are survey-based Prime membership estimates from other companies that range as high as 85 million U.S. members and as low as 60 million.

Correction: A previous version of this post and chart incorrectly displayed estimated Prime memberships as Prime households.

But some households have multiple memberships, thanks largely to households that have both a main Prime subscription and family members with student subscriptions. According to Morningstar, U.S. Prime households have on average 1.2 memberships for the past three years and about 1.1 memberships before that.

To more accurately estimate Prime households, we divided the number of memberships for the past three years by 1.2 and divided earlier years by 1.1. For example, we’ve updated the number of estimated U.S. households with Amazon Prime in 2017 to 66 million, instead of our previous figure of 79 million, which reflected memberships.


This article originally appeared on Recode.net.