Amazon Previews Rival Streaming Service to Netflix

5:25 AM PST 2/1/2011 by Georg Szalai

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Jonathan Fickies/Bloomberg/Getty Images

An ad for the service, which would be bundled with Amazon Prime, briefly appeared on the e-tail giant's site.

NEW YORK – Netflix’s streaming service, which has helped make the company the second-largest U.S. media subscription service and boosted the firm’s market value, may finally get competition from Amazon.com.

Amazon, led by CEO Jeff Bezos, has been rumored to work on a streaming video service offer bundled with its Amazon Prime service, which for an annual subscription fee of $79 a year gives users unlimited free two-day shipping, for a while. Tech blog Engadget
over the weekend showed a screen shot of an ad that has since disappeared and mentioned content from BBC America and PBS.

“Your Amazon Prime membership now includes unlimited, commercial-free, instant streaming of 5,000 movies and TV shows at no additional cost,” the screen shot, which featured the film The Girl Who Kicked The Hornet’s Nest, said.

“The link quickly disappeared, so we don’t know if it was a real video service in progress, a test, or vaporware,” Lazard Capital Markets analyst Barton Crockett said. “Still, the possibility that this is real is a provocative statement of how Amazon could become Netflix’s first meaningful streaming competitor.”

Indeed, the bundled offer “highlights the potential for Amazon to “superset” Netflix, or offer Netflix’s core streaming feature as part of a more valuable, broader package,” Crockett argued. “Amazon Prime includes free shipping for purchases and costs $79 per year, versus a Netflix streaming-only sub at $95.88.”

The renewed talk about a likely Amazon streaming offer comes after the e-tailer recently said it was acquiring full control of Lovefilm, which has been called the European version of Netflix.

But the timing of Amazon’s streaming service bundle launch likely depends in part on how much access to major content it can negotiate. “We suspect Amazon Prime is not launching in the immediate future as the service description of 5,000 movies and TV shows does not appear to match up with the aforementioned content we saw,” BTIG analyst Richard Greenfield said. “This implies that Amazon is still working on its movie/TV content deals with all the majors.”