Amazon, a global e-commerce giant, has always been known for its innovative approach to business. In 2016, it made a significant move by launching Prime Video, a streaming service that competes with the likes of Netflix and Hulu. But why did Amazon decide to venture into the highly competitive world of online streaming? This article will delve into the reasons behind Amazon’s decision to launch Prime Video, its benefits to Amazon and its customers, and how it has impacted the streaming industry.

Expanding Amazon’s Ecosystem

One of the primary reasons Amazon launched Prime Video was to expand its ecosystem. Amazon’s business model is built around creating a comprehensive ecosystem that keeps customers engaged and encourages them to spend more. By adding a streaming service to its Prime membership, Amazon not only increased the value of the membership but also created another avenue to keep customers within its ecosystem.

Driving Prime Membership

Prime Video has also been instrumental in driving Amazon Prime memberships. The addition of a streaming service made the Prime membership more attractive, leading to an increase in sign-ups. This is beneficial for Amazon as Prime members tend to spend more on the platform compared to non-Prime members.

Creating a New Revenue Stream

Launching Prime Video also created a new revenue stream for Amazon. While the primary aim was not to compete with Netflix or Hulu, the success of Prime Video has made it a significant player in the streaming industry. This has resulted in additional revenue for Amazon, both from Prime memberships and from advertisers on the platform.

Enhancing Customer Experience

Amazon is known for its customer-centric approach, and Prime Video is no exception. By offering a wide range of content, including original series and movies, Amazon has enhanced the customer experience. This has not only increased customer satisfaction but also helped in retaining customers.

Competing in the Streaming Industry

While not the primary reason, competing in the streaming industry was definitely a factor in Amazon’s decision to launch Prime Video. The success of Netflix and Hulu showed the potential of the streaming industry, and Amazon, with its resources and customer base, was well-positioned to enter the market.


In conclusion, Amazon’s decision to launch Prime Video was a strategic move aimed at expanding its ecosystem, driving Prime memberships, creating a new revenue stream, enhancing customer experience, and competing in the streaming industry. The success of Prime Video has not only benefited Amazon but also transformed the streaming industry, making it more competitive and diverse.

By understanding why Amazon launched Prime Video, we can gain insights into Amazon’s business strategy and the factors that drive its decisions. This can be valuable for businesses looking to compete or collaborate with Amazon, or for anyone interested in the dynamics of the streaming industry.

Key Takeaways

  • Amazon launched Prime Video to expand its ecosystem and drive Prime memberships.
  • Prime Video has created a new revenue stream for Amazon and enhanced the customer experience.
  • The success of Prime Video has made Amazon a significant player in the streaming industry.

This article has provided a comprehensive analysis of why Amazon launched Prime Video. It has highlighted the strategic thinking behind Amazon’s decision and the impact it has had on Amazon and the streaming industry.


Alex likes to write about anything related to technology, marketing and gadgets. He sometimes reviews the latest tech and also writes on other blogs.