By Jared Newman | Monday, January 31, 2011 at 9:17 am
Amazon could be pretty close to offering a subscription streaming video service similar to that of Netflix.
We’ve heard this story before, in a couple of rumors from last year, but over the weekend an Engadget reader reportedly spotted the streaming option while perusing Amazon’s on-demand video library. Amazon has also registered the web domain primeinstantvideos.com and several variants.
According to the tipster, Amazon may tie the streaming service to Amazon Prime, the retail program that provides unlimited two-day shipping for $79 per year. Subscribers would get access to roughly 5,000 videos in 480p resolution with no commercials, at no extra cost. This would undercut Netflix’s streaming plan by $17 per year.
Rumors aside, Amazon’s entrance into the market isn’t terribly surprising. Hollywood executives began grumbling last year that Netflix was becoming too powerful. Studios want to extract more money for streaming content, and competition could bring about bidding wars for exclusives and long-term agreements.
But competing with Netflix won’t be easy. As of last August, the company offered more than 20,000 streaming movies and TV shows, compared to the 5,000 that Amazon will reportedly offer. And Netflix is making big investments in television, recently spending $150 million to $200 million for reruns of Disney and ABC shows. Amazon will also have to find a way onto game consoles, set-top boxes and smartphones, on which Netflix is already well-established.
Both Amazon and Netflix will be under pressure to keep prices low while spending more money on content, and that brings up a unique challenge for Amazon: If the streaming service is tied to Amazon Prime, the company will have to deal with existing subscribers who may not be interested in the video component at all. I envision outraged customers if Amazon has to raise Prime prices to compete with Netflix.
All of this assumes, of course, that Amazon really is preparing a subscription video service, but it seems harder than ever to deny now.