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Why Amazon.com, Inc. (AMZN) Wants To Sell Internet Service in Europe

Amazon.com (AMZN) Amazon

Amazon.com, Inc. is reportedly working on a plan to sell broadband internet in Europe in bid to boost use of the company’s Prime service. According to a report in The Information (via Engadget), the e-commerce giant is teaming up with a Hollywood production studio to become an internet service provider (ISP) and sell internet directly to users.

Amazon Prime Can Easily Become ISP in Europe

The U.S. e-commerce company wants to build its own ISP and bundle internet service with Prime streaming video, according to the report. This would allow the company to become an effective cable operator in Europe.

Amazon.com Inc (NASDAQ:AMZN)

The report in Engadget suggests that Amazon can start an internet selling business in Europe without any problems. According to the reports, regulations in European countries like the UK or Germany make it easier for upstart broadband providers to get into the business without having to build out their own network.

“Most broadband providers in the US restrict access to their network, but in the UK, for example, BT is required to offer wholesale access to its network. If Amazon were to re-sell that access, it could do so at cost and improve its margins through the retail business or by selling access to additional cable channels like Starz and Showtime, as it does in the US,” the Engadget article reads.

Amazon Prime

Amazon’s Prime membership provides members with free shipping on qualifying orders, faster shipping times, unlimited movies streaming, unlimited music streaming, and access to audiobooks.

According to Consumer Intelligence Research Partners, the e-commerce giant was able to boost its total US Prime membership by 19 million since July 2015. The report, released in the second quarter this year, showed that the online retailer has a total of 63 Prime members in the US, up from 44 million members since the end of the second quarter in 2015.

A recent report in Business Insider suggested that Amazon’s Prime service could be a bigger threat to retailers. According to the report, the Prime service could be a real threat to retailers instead of the video streaming giant Netflix, Inc. (NASDAQ:NFLX). Prime members tend to buy more on Amazon.com compared to other retailers, the report added.

Morgan Stanley said in a report that AMZN will inch closer to the $1,000 mark, thanks to Prime’s surging popularity. The firm told its clients that it’s time to buy even more shares in the online retail juggernaut.

According to Morgan Stanley, 40% of Prime members spend a minimum of $1,000 on Amazon every year. The e-commerce company understands how much of an impact Prime has on its revenues. This is why it keeps adding new features to get new subscribers and to keep old users satisfied.

A vast majority of Wall Street analysts are bullish on Amazon.com, Inc. . Even with the enormous gains the company has witnessed since 2011, nearly all analysts expect major gains. The likes of JPMorgan Chase and Co. and RBC Capital Markets forecast shares to hit $1,000 within the next 12 months.

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