Amazon Launching Unlimited Movie Streaming Service: Can It Beat Netflix?

Amazon.com is developing a film streaming service, which would compete directly with Netflix Inc. Amazon is planning to bundle access to the service with Amazon Prime, a premium service that guarantees Amazon customers unlimited free shipping of books and other items sold by the online retailer after paying an initial fee.

The company already offers online movies to rent or to buy digitally. Amazon still couldn’t be reached for comment. But it may have unintentionally revealed its plans by publishing a screen shot promoting the new service. The screen shot, contained text saying: “Your Amazon Prime membership now includes unlimited, commercial-free, instant streaming of 5,000 movies and TV shows at no additional cost.”

Just last month Amazon confirmed it was buying Lovefilm, the European subscription film and game service. The bookseller already owned 42 per cent of the company and is now in the process of purchasing all the remaining 58 per cent shares of British DVD and games rental firm Lovefilm for an undisclosed price [about for £200m].

Amazon is planning to bundle access to the service with Amazon Prime, a premium service that guarantees Amazon customers unlimited free shipping of books and other items sold by the online retailer after paying an initial fee.

Customers signed up to Amazon’s Prime scheme cough up an annual one-off payment to get “free” next day delivery on their orders for a wide range of items.  According to sources, Amazon will bundle access to its film streaming service with that scheme.

However, Amazon faces an uphill struggle if it is to overhaul Netflix in subscription video. Netflix shares have risen almost fourfold in the past 12 months as the company has built a dominant position in online film viewing, giving Netflix a market capitalization of $11.2bn. The California-based group has 20m subscribers to its DVD subscription service but has succeeded in migrating many of those viewers to the online service.

Netflix has also begun to pay large sums for rights to Hollywood movies and last year agreed a five-year online streaming deal worth $900m with Paramount Pictures, Metro-Goldwyn-Mayer and Lions Gate Entertainment. This has delighted the studios, which have watched in despair as DVD sales have tumbled across the globe.