February 2, 2011

Amazon Setting Up Video Streaming Service

The Financial Times (FT) reported on Wednesday that Amazon.com is developing a film streaming service, which would compete directly with Netflix Inc.

The FT said, citing a person familiar with Amazon's plans, that Amazon is planning to bundle access to the streaming service with Amazon Prime.

The service guarantees Amazon customers unlimited free shipping of books and other items offered by the retailer after paying an initial fee.

Amazon agreed to buy the 58 percent of British DVD and games rental firm Lovefilm that it does not already own for an undisclosed price.

Technology blog Engadget published a screenshot of a promotion for the upcoming service.

"Your Amazon Prime membership now includes unlimited, commercial-free, instant streaming of 5,000 movies and TV shows at no additional cost," it said.

Amazon already offers online movies for rent or purchase as part of its video on demand service, but it has yet to allow digital subscriptions offering unlimited streaming like Netflix.

"Amazon is switching focus away from the rental business in favor of the subscription model which connects far better with its core, online retailing profit centre," Arash Amel, research director at media consultancy IHS Screen Digest told the FT.

"This is about keeping consumers in the Amazon environment while providing extra value -- providing subscription video is a far better way to do that than by selling digital downloads (of movies)," Amel said.


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