Amazon primes movie streaming service

Amazon is developing a film streaming service that would compete directly with Netflix in a move that could have a big impact on the fortunes of Hollywood studios struggling to cope with declining DVD sales.

The company is planning to bundle access to the service with Amazon Prime, which gives customers unlimited free shipping on items for an initial fee.

Amazon did not respond to requests for comment. But it may have inadvertently revealed its plans by publishing a screen shot promoting the service.

The shot, which appeared briefly before being removed, was revealed by the Engadget technology blog.

It 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.”

A person familiar with Amazon’s plans told the Financial Times that the group had been working on the streaming service.

The news comes as Amazon is stepping up its efforts to compete with Netflix. It recently acquired Lovefilm, the UK DVD subscription service, for £200m.

Amazon already offers online movies to rent or buy. However, Arash Amel, research director for digital media at IHS Screen Digest, a media consultancy, said the company had more
to gain from digital subscriptions.

“Amazon is switching focus away from the rental business in favour of the subscription model which connects far better with its core online-retailing profit centre,” the person said.

“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 [one-off] digital downloads.”

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 capitalisation of $11.2bn.

The California-based group has 20m subscribers to its postal DVD subscription service but has succeeded in migrating many of those viewers to the online service.

The growth of Netflix has changed the home entertainment landscape in the US. Blockbuster, the once-dominant DVD rental chain, filed for bankruptcy protection last year after finding itself unable to compete with the company.

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 Lionsgate Entertainment.