Looking to take the battle for streaming video market share more directly to market leader Netflix (NASDAQ: NFLX), Amazon (NASDAQ: AMZN) has unhooked a version of its SVOD service from its "Prime" business segment, and is now offering it as a stand-alone subscription video service priced at $8.99 a month.
The move comes a day before Netflix (NASDAQ: NFLX) is set to announce its first-quarter earnings — and also on the eve of price hikes for the Los Gatos, Calif.-based SVOD giant, which will see the bulk of its customers paying $9.99 a month.
"We view this move by Amazon as a significant negative development for Netflix." RBC's Mark Mahaney told investors.
Amazon has built an SVOD user base of more than 50 million, according to analyst speculation. Until now, that has all been tied to the e-tailer's Prime service, which costs customers a one-time yearly payment of $99 and offers them benefits like free two-day shipping on select products.
Prime membership will also now be available for $10.99 per month.
Amazon's willingness to unhook its SVOD service from Prime suggests it now has greater confidence in its growing program library. The service has created buzz with original series including the Emmy-winning Transparent, Mozart in the Jungle and Bosch. It has a deal with HBO to show acclaimed archival series including The Wire and it has an agreement with premium cable operator Epix to show recent theatrical releases.
Amazon chief executive Jeff Bezos is "absolutely escalating the arms race with Netflix," Wedbush Securities analyst Michael Pachter said to the Wall Street Journal. "The two services will compete more closely for customers, and Amazon has the marketing advantage by offering the full Prime service for just a little bit more each month."
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