E-commerce giant Amazon is unbundling its Prime membership, which bundles video streaming, music, free delivery, and exclusive deals, into distinct tiers tailored to different customer segments across India.
Amazon has revamped its Prime membership programme in India “to cater to diverse income levels”, Abhinav Agarwal, director and head of Amazon Prime India, told Mint in an interview.
“Amazon Prime focused on customizing benefits such as Prime Video and changed membership fees accordingly for Prime in India,” he added.
The India-specific unbundling approach for a service long defined by its all-in-one pitch reflects evolving market dynamics, where a metro subscriber primarily interested in streaming content has vastly different needs and willingness to pay compared to a tier-II city customer focused on fast delivery.
How unbundling works
Amazon's unbundling strategy segments customers by behaviour rather than price.
The ₹399 Shopping Edition offers delivery-only benefits, targeting transactional buyers in smaller cities. Prime Lite at ₹799 adds limited video access for price-conscious users, while the standard ₹1,499 Prime membership includes full benefits but now comes with ads on Prime Video.
Customers who want the original ad-free experience must pay an additional ₹699, raising the total by 47% to ₹2,198.
Amazon India's advertising revenue grew 25% to ₹8,342 crore in 2024-25, outpacing the 21% growth in its marketplace business and making it one of the company's fastest-growing segments, data from business intelligence platform Tofler showed.
The tiered approach reflects Amazon's shifting priorities. Prime Video subscriber growth has plateaued at around 21 million compared to JioHotstar's 300 million. Four out of five Prime members use video regularly, while one in three engages with music, according to data Amazon shared with Mint.
The company doesn't disclose how many actively use shopping benefits versus those who primarily subscribe for content. However, it is betting on delivery infrastructure rather than content in tier-II and -III cities.
It invested ₹2,000 crore in India 2025 to expand its fulfilment network, making same-day and next-day deliveries available in 850+ additional cities. Agarwal noted that same-day orders in metros grew 65% year-on-year, while tier-II and -III cities saw 50% growth in next-day deliveries, suggesting the infrastructure-focused, lower-priced tiers are finding traction beyond the country's largest markets.
Strategic pivot
The bundling model was built on cross-subsidisation: Video content would attract subscribers, while shopping activity would generate revenue. But that equation appears to be shifting, according to analysts.
Primarily because “Amazon’s video-first subscribers never evolved into the high-frequency shoppers the company originally anticipated,” said Sohom Banerjee, senior research associate at CUTS International, a policy research and advocacy group.
While Amazon has positioned its tiered Prime structure as an expansion of consumer choice, “the strategy simultaneously appears designed to nudge pure video users towards either higher spending or exit, a deliberate devaluation of the default video offering, pressuring heavy streamers to either tolerate ads, downgrade to constrained access, or churn altogether,” he added.
"This sort of ‘subsidy’ is to pull people in to use their product, and then once they have a mass of users, it is when they start trying to see how much they can squeeze," said Isha Suri, an independent researcher and global AI and market power fellow at civil society organization The European AI Society Fund.
“The problem with integrated business models is that they can use different levers to abuse that dominant position and see how much it can squeeze out from its loyal customers.”
Amazon now seems to be “prioritizing Arpu [average revenue per user] and commerce value over keeping users who barely shop and also refuse ads if they don’t subsidise either way”, said Abhivardhan, president of industry forum Indian Society of Artificial Intelligence and Law.
The strategic pivot is clearest in small cities, where Amazon is betting on delivery infrastructure over content with the ₹399 shopping-only tier. “They intend to penetrate and convert more tier-II and tier-III district-based consumers into long-term shopping users through the Prime Lite and Prime plans,” he added.