Amazon India Splits Prime into Tiered Video, Music, and Shopping Plans
E-commerce giant Amazon is fundamentally restructuring its Prime membership program in India, moving away from its traditional all-in-one bundle. The company is introducing distinct tiers tailored to different customer segments, a strategic shift that reflects the evolving dynamics of the Indian market.
Abhinav Agarwal, director and head of Amazon Prime India, explained to Mint that the revamp is designed "to cater to diverse income levels" across the country. The India-specific unbundling approach marks a significant pivot for a service long defined by its comprehensive pitch.
How Amazon's New Tiered System Works
Amazon's strategy segments customers by behavior rather than just price. The new structure offers three primary options:
- The ₹399 Shopping Edition: This entry-level tier provides delivery-only benefits, specifically targeting transactional buyers in smaller cities and towns.
- Prime Lite at ₹799: This mid-tier adds limited video access for price-conscious users who want some entertainment benefits alongside shopping.
- The Standard ₹1,499 Prime Membership: This includes full benefits but now comes with advertisements on Prime Video. Customers seeking the original ad-free experience must pay an additional ₹699, bringing the total cost to ₹2,198—a 47% increase.
The tiered approach reflects Amazon's shifting priorities in the Indian market. While Prime Video subscriber growth has plateaued at approximately 21 million—far behind JioHotstar's 300 million—four out of five Prime members regularly use video services, and one in three engages with music.
Strategic Shift in Business Model
The original Prime bundling model was built on cross-subsidization: video content would attract subscribers, while shopping activity would generate revenue. However, this equation appears to be changing significantly.
"Amazon’s video-first subscribers never evolved into the high-frequency shoppers the company originally anticipated," said Sohom Banerjee, senior research associate at policy research group CUTS International.
Banerjee added that while Amazon has positioned its tiered structure as an expansion of consumer choice, "the strategy simultaneously appears designed to nudge pure video users towards either higher spending or exit." This represents a deliberate devaluation of the default video offering, pressuring heavy streamers to either tolerate ads, downgrade to constrained access, or leave the platform altogether.
Focus on Infrastructure and Revenue Growth
Amazon is now prioritizing average revenue per user (ARPU) and commerce value over retaining users who barely shop and resist advertisements. The company invested ₹2,000 crore in India during 2025 to expand its fulfilment network, making same-day and next-day deliveries available in over 850 additional cities.
According to Agarwal, same-day orders in metros grew 65% year-on-year, while tier-II and tier-III cities saw 50% growth in next-day deliveries. This suggests the infrastructure-focused, lower-priced tiers are gaining traction beyond India's largest markets.
Amazon India's advertising revenue grew 25% to ₹8,342 crore in 2024-25, outpacing the 21% growth in its marketplace business and making advertising one of the company's fastest-growing segments.
Market Implications and Consumer Impact
The strategic pivot is most evident in smaller 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," said Abhivardhan, president of the Indian Society of Artificial Intelligence and Law.
Industry observers note that integrated business models like Amazon's can use different levers to maximize revenue from loyal customers. "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 fellow.
The unbundling reflects how metro subscribers primarily interested in streaming content have vastly different needs and willingness to pay compared to tier-II city customers focused on fast delivery. Amazon's India-specific approach demonstrates how global tech giants must adapt their strategies to local market realities and consumer behaviors.
