Amazon Jumps Into Instant Streaming Game

NEW YORK (MainStreet) — Watch out Netflix, Amazon is coming after you.

Amazon (Stock Quote: AMZN) is introducing a new instant streaming feature for TV shows and movies for customers who have a Prime membership, the company announced Tuesday. Despite a few apparent drawbacks to the new service, its competitors would be wise to worry about it.

The service is being lumped into the existing Prime feature, adding unlimited streaming for 5,000 movies and TV shows to the Prime membership’s guarantee that any order will be delivered within two days, so users have no choice but to pay the $79 annual fee upfront for Prime in order to take advantage of this new feature.

"Millions of Amazon Prime members already enjoy the convenience of free Two-Day Shipping," said Robbie Schwietzer, vice president of Amazon Prime. "Adding unlimited instant access to thousands of movies and TV shows at no additional cost is a great way to give members even more value for their $79 annual Amazon Prime membership."

The $79 annual fee actually ends up being substantially cheaper than the $7.99 a month streaming-only option from Netflix (Stock Quote: NFLX), which totals $96 per year, but this may end up being a problem of perceived costs. Amazon’s biggest obstacle is likely going to be its current pricing model.

The genius of Netflix was providing unlimited movies each month for less than the cost of renting two or three films from stores like Blockbuster. Even if Amazon proves cheaper in the long run, many consumers may have an easier time trying to justify spending $8 a month for a new subscription rather than committing $79 upfront. If Amazon really wants to compete with Netflix and Hulu, it should consider offering a monthly option instead of, or at least in addition to, the annual subscription.