By Katherine NoyesLast year, we wrote about Amazon-owned LoveFilm’s struggles in the UK — as evidenced by its use of door-to-door salesmen to sign up subscribers — but today the company is shaking things up completely.In a move widely regarded as a strike against key competitor Netflix, Amazon on Wednesday folded its LoveFilm video-on-demand service into its British Amazon Prime service, creating a one-stop service for digital streaming, DVD rental and books.Amazon Prime offers its 20 million members unlimited one-day delivery on more than 7 million items and access to 500,000 Kindle books to borrow. LoveFilm Instant includes unlimited streaming of more than 15,000 popular movies and TV episodes.Here’s the particularly interesting part: With LoveFilm’s transformation into Prime Instant Video, Amazon is increasing the cost of Prime membership from £49 to £79 — a 35 percent saving over the price of the two previously separate services combined, Amazon notes. Netflix, by contrast, charges its estimated 2 million UK customers £5.99 a month, or about £72 a year — the same price as was charged for the previously separate LoveFilm service.This week, new customers can still get a full year of Prime for £49. Current Prime members, meanwhile, can enjoy unlimited streaming at their current price until their renewal date. Amazon will still use the LoveFilm brand for its DVD-by-post rental business, and users who want only Prime Instant Video can continue to pay £5.99 per month, according to reports.Amazon is also increasing its investment in exclusive content and original programming only available through Prime, it said.”Millions of customers in the US have streaming video included as part of their Prime membership, and they tell us they love the combination of unlimited delivery, the ability to borrow Kindle books, and convenient access to thousands of the most popular movies, TV shows and exclusive videos,” said Greg Greeley, vice president of Amazon Prime. “We are delighted to be bringing that same combination of services to the UK, providing members truly unique benefits they can enjoy every day of the year.”Folding LoveFilm into Amazon could certainly be a remedy for the marketing problems we noted last year in LoveFilm’s site design. It also seems fair to say that Amazon’s brand recognition must surely overshadow LoveFilm’s — more and more each year, in fact.Will this move help give Amazon the leg up it needs on Netflix in the UK? That will depend in large part on consumers’ willingness to accept the subscription price increase, but the idea of combining two previously separate services into one for only a slightly higher price could certainly give it some play.A price hike has also been rumored for US Prime customers — time will tell if that one comes to pass. In the meantime, check out our Pricing Psychology & Tactics Toolkit for more on the ins and outs of making something like this work.
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