The service would provide "unlimited, commercial-free, instant streaming" of 5,000 movies and TV shows' with content similar to what is available through Netflix's streaming component. Amazon's service, though, would be limited to standard-definition video.
The notable observation here is that Amazon will try to create a business model that does not rely directly on incremental revenue, but rather on increasing subscribers to another existing service Amazon deems important. That's similar to Apple selling music and video to sell iPods and iPads. Netflix, Comcast and others, on the other hand, have less wiggle room, since their video businesses are about selling video.
Comcast, of course, also is trying the Amazon tactic, tying a fixed-line cable subscription to its mobile and untethered online video service. Still, it always is dangerous when a new competitor proposes to give away what another company sells.
Amazon Prime is a membership program that provides free two-day shipping as well as one-day shipping for $3.99 per item on certain purchases.
Currently Amazon offers a selection of more than 75,000 movie and TV show rentals or purchases through PCs, Microsoft's Xbox 360 and connected-TV devices, including those from TiVo, Samsung, Sony, Panasonic, Vizio and Roku.
Amazon.com's agreement to buy full ownership of LoveFilm, a European DVD rental and movie-streaming service, confirms the e-commerce giant intends to beef up its digital-video offering.
Operating in the U.K., Scandinavia and more recently Germany, LoveFilm's service is very similar to that of Netflix in the U.S. But it is well behind the American company, both in subscribers—1.6 million versus 17 million—and in the amount of streaming content it has licensed.
