Amazon takes on Netflix with standalone service

Amazon is going head-to-head with streaming rival Netflix by launching its Prime Video as a standalone, pay-monthly service for the first time.

In details published to its US site, Amazon revealed that it will now offer Prime Video as a US$8.99 per month subscription video-on-demand offering, as well as included in its broader Amazon Prime package.

Amazon Prime, which was previously available for a flat annual fee, will also now be available for US$10.99 per-month.

A note on Amazon’s UK site also said that users will can now be able to change to Prime Video only for £5.99 (US$8.50) per month at the end of the sign-up process for Amazon Prime. Amazon noted that it has offered a standalone service in the UK since 2014, continuing what was previously the LoveFilm instant package.

With its new pricing option, Amazon will undercut its biggest rival, Netflix. In the US a new entry-level Netflix subscription now costs US$9.99 per month and from next month, long-standing Netflix customers who have been paying US$7.99 will also be upped to the new higher rate, according to recent reports.

Commenting on the move, Ampere Analysis research director Richard Broughton said that by detaching Prime Video from the Amazon Prime retail service, Amazon is positioning the service “very much as a head-to-head competitor with the other major subscription video-on-demand services”.

“A large part of Amazon’s business is still physical media products,” he added. “Amazon of course is conscious that the market it’s operating in, while it is very successful, a large chunk of it is in slow decline. So the decoupling means that it’s placing a stake in the ground for its service being a contender as a standalone service in itself.”

Paolo Pescatore, director, multiplay and media at research house CCS Insight, said: “This significant move underlines the company’s commitment to video and we firmly believe that the next step is to launch the new service overseas.

“Offering video as part of Prime was holding Amazon back from launching into new markets, as there was little to choose from in terms of price. It therefore boils down to content and new features such as UHD 4K, HDR, offline viewing and much more.”

Amazon Prime Instant Video was previously available as part of Amazon Prime – an annual subscription service that costs US$99 per year in the US.

The movie and TV show streaming service, which includes original series including Transparent and The Man in the High Castle (pictured), was included alongside other Prime offerings such as ebook access, music streaming, free two-day shipping and free same-day delivery in eligible areas.

Amazon also offers pay-per view films to buy or rent, including new releases like Black Mass, The Martian and The Hunger Games: Mocking Jay Part 2.

The news comes ahead of Netflix’s Q1 2016 earnings announcement, which is due later today.