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Amazon rolls out monthly rate for Prime video-streaming service

Amazon Inc is poised to challenge streaming giant Netflix Inc with the announcement that its new Prime video-streaming service will now offer a new monthly subscription.

Prime video streaming service normally costs $79 per year in the United States. It also includes a free two-day shipping option, access to Amazon’s Kindle e-book collection, and free video streaming. Amazon now offers Prime for a monthly subscription of $7.99 every month, which normally adds up to $95.88 annually. However, the rate can now be purchased on a monthly basis according to its website.

The said option is similar to the offer of Netflix which also costs $7.99 every month without the vast collection of e-book lending library and free shipping. Hulu, another streaming competitor, also offers a $7.99 per month option.

According to an Amazon spokesman, the monthly rate option is just a test and offered no further explanation.

Both Hulu and Netflix offer more movie selection than Amazon at the moment. Amazon is still boosting its catalogue by buying more content from TV studios and Hollywood.

“As Amazon continues to add movie and TV content to Prime, we see it likely adding more competitive pressure to the legacy online video services,” analyst Colin Sebastian said.

The shares of Netflix fell to $76.27 or 2.7 percent during Tuesday’s trading, while Amazon’s rose 1.1 percent to $237.01.

Amazon’s offer is timed during the holiday buying season. That means buyers can now avail of the free 2-day shipping option without the necessary yearly fee, said Sebastian.

“While one risk for Amazon is that consumers use Prime for just one month to take advantage of free shipping on large purchases, the test could also reveal that a ready market for alternative pricing and serve as a new customer acquisition tool,” he added.

source: reuters