Amazon is gunning for Netlix and Hulu. That's been the conventional wisdom anyway, with many expecting the ecommerce giant to launch a stand-alone video streaming service to compete with those companies. This week, Amazon watchers got the clearest sign yet that this is exactly where they're headed.
But don't call it a Netflix killer yet.
Without telling anyone, Amazon started offering its Prime membership for a monthly price that will look familiar to Hulu and Netflix subscribers: $7.99. It's the first time they've offered Amazon Prime for anything other than an annual fee. Its library of streaming TV shows and movies still comes bundled with free two-day shipping on Amazon purchases and one borrowed ebook from the Kindle lending library.
A lot of the headlines announcing this news were framed in that cautionary, "here comes the [insert popular product or company] killer" fashion the tech press is known for. Amazon is slowly positioning itself to go up against Netflix and Hulu, but it's not there yet. For one thing, $7.99 per month works out to $95.88 per year, a 21% increase from Prime's current price tag. If you want to make your product more competitive against incumbents, raising the price usually isn't typically part of that formula.
But the subtle shift toward a higher price tag could also be a sign that the company plans to ramp up its content deals for Amazon Prime even further and needs to better cover those steep costs. That would be a smart move, because as it stands, Amazon Prime doesn't quite have the content offering of Hulu or Netflix.
During peak hours, Netflix commands 33% of downstream Web traffic in all of North America, AllThingsD reported today. YouTube, as enormous as it is, makes up less than half that. Netflix is huge.
Even during the height of Netflix's PR gaffes last year, I never considered canceling my subscription. Sure, I cut off the DVD-by-mail portion of it when they increased the price, but by then the Watch Instantly streaming catalogue had grown impressive enough for me to hang onto it. That, combined with Hulu Plus makes up the bulk of my TV and movie consumption. Amazon Prime is nice, but it's still growing into something that could stand effectively on its own.
There should be no doubt that Amazon is planning to get more aggressive in this space. New deals with content providers, combined with an expansion of the service's availability across streaming devices and smart TVs will make Amazon Prime a formidable force in the marketplace in due time. Meanwhile, Netflix isn't going anywhere.