Amazon Challenges Netflix and Hulu With Free Streaming for Prime Members

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Anticipated for more than a month, Amazon today announced that it is offering free streaming of movies and television shows to any of its Prime members, those who pay $79 per year to receive expedited shipping. More than 5,000 movies and TV shows are available to Amazon Prime members to stream on Mac and Windows PCs as well as almost 200 connected TVs, Blu-ray players, and set-top boxes.

To showcase some of the 200 models, Amazon provides a link to set-top boxes, including the Logitech Revue and several Roku boxes. According to the company, the $79 annual fee will not rise as a result of this additional service.

For its part, Roku sent out a press release this morning stating that "this new service is available today and will automatically appear inside the Amazon Instant Video channel already available on Roku."

The news of Amazon's free streaming service is also being followed by the company's blitz to get new users signed up for Prime, which offers free two-day shipping and $3.99 one-day shipping.

The company is offering a carrot to those considering Prime: a free thirty-day trial for Amazon Prime that includes both the free or discounted shipping as well as access to the streaming content.

For those who want to purchase the TV shows or movies, a one-click purchase is available, as it has been for some time with Amazon's digital downloads of MP3 and movie files.

As someone who has used Amazon Prime for several years, to ship packages not just to myself but also to family members, the timing of this particular announcement is spot-on: Yesterday, we found that our two local Blockbuster stores in Kingsport, Tennessee, are closing.

While we seldom use the Blockbuster stores, except to exchange discs that we receive by mail-as part of Blockbuster's attempt to counter Netflix-for another local disc until our next by-mail DVD arrives, the announcement yesterday of the rapid closing of the two stores set off a family discussion.

The two stores will be closed within five days, which led to a discussion as to whether we needed access to a physical store for those moments of browsing serendipity or whether we would shift to by-mail only through Netflix.

"We could just go to fully streaming," one family member said, which was countered by another, younger family member who reminded us that not everything is available on the Netflix streaming site.

That limited streaming potential may be an issue for Amazon, too, as an overview of the available titles seems to trend more toward BBC series (Doctor Who, Top Gear, etc) and other titles not typically available in the U.S.

A reading of the end user license agreement for the Amazon service also notes that the service is only available in the United States, in line with the Amazon Prime shipping discounts.

Given this fact, it may be that Amazon has cut deals with foreign movie and TV distributors to make their content available in the U.S., in hopes to drive market awareness or an uptick in viewership of particular content.

Much of the available content may appeal to the PBS demographic, which is one of the few places where British content is consistently aired, and that demographic may rank high on the list of Amazon Prime members who have the disposable income to purchase frequently enough from Amazon to justify the $79 annual fee.

Should Amazon prove successful in this endeavor, it will put pressure on Netflix and Hulu Plus to offer additional benefits for the higher-price subscription services each offers. Netflix does not yet offer a streaming-only service, so it may not be a fair comparison to its $7.99-9.99 DVD-by-mail-plus-streaming service, but Hulu Plus charges $7.99 per month ($95.88 annually).

Regardless, this is new territory for streaming, following a trend set a few years ago-in the days of dial-up internet connections-of offering free connectivity to members of various buying clubs such as Costco or Sam's Club.

Finally, as it's so easy to buy a set-top box with Amazon, and justify the free shipping as a reason to start an Amazon Prime account, I'm quite keen to see if free streaming really makes an impact in overall sales of set-top boxes at Amazon.

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