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Amazon Rolls Out Streaming Video Service

February 22, 2011

Amazon Inc. rolled out a streaming TV and movie service this week for its prime customers, taking a direct shot at its growing rival Netflix.

The company announced on Tuesday that its prime customers can choose among 5,000 TV shows and movies like “Syriana,” “Doctor Who: Season 4,” and “Analyze This” to stream through computers and devices such as Roku.  The streaming service is available to prime members at no additional cost.

“We’ve have said for a long time that we expect someone to compete with Netflix,” Netflix spokesman Steve Swasey told Reuters. “When you have a big growing category it attracts competition.”

The move ramps up competition among Netflix, Apple, Google and Microsoft, who are all trying to control the living room by allowing consumers to watch TV shows and movies directly from the Internet.

These companies are all trying to woo media conglomerates like Time Warner Inc., Walt Disney, News Corp., Viacom and CBS for their TV shows and movies.

So far, media companies are cautious about allowing their content for use on these types of services because they compete with cable operators that pay a premium to carry TV and movies.

Amazon offers “Instant Video,” which is a digital service that offers customers over 90,000 movies and TV shows to buy or rent on an a la carte basis.

“This offering from Amazon will not likely cause much of an exodus (if at all) from Netflix in the beginning,” Macquarie analyst Ben Schachter wrote in a note to Amazon investors. “This is a nice free additional service and should reinforce for Prime members what they love about Amazon.”

Netflix is shifting from delivering its customers movies and TV shows through the mail to streaming video online.

The company now stands at 20 million and it said that a vast majority of its U.S. subscribers stream content on a range of devices.  Recently, it launched a streaming-only subscription plan in the U.S. for $7.99 a month for over 20,000 movies and TV shows.

Netflix said in a recent government filing that it runs the majority of its computing through Amazon Web Service and warned that any disruption of that service would impact operations.

“While the retail side of Amazon may compete with us, we do not believe that Amazon will use the AWS operation in such a manner as to gain competitive advantage against our service,” Netflix said in the filing.

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