By Barry Eitel
SAN FRANCISCO
Amazon will launch a video streaming service supported by advertising sometime early next year, according to anonymous sources speaking to The New York Post in a report published Friday.
The service will be separate from the company’s Prime subscription service, which costs $99 annually and includes some streaming options.
Instead, this service will likely compete with Netflix and Hulu, the sources said. The service is part of a shuffling of the online retailer’s media offerings. Amazon first dabbled with video streaming in 2006, with Amazon Unbox, which later became Amazon Instant Video.
The service is currently bundled inside Amazon’s Prime membership. Like Netflix and Hulu, Amazon also began experimenting with original content about a year ago.
Rumors have swirled for several months about an ad-supported service from Amazon but now sources close to the company are saying it is definitely driving forward with the plan.
Analysts believe that Amazon will continue its legacy of undercutting rivals with the video streaming service as well, which could cause a swell of competition for Netflix and Hulu, both of which charge customers less than $10 a month for their services.
The idea, it seems, is to bring more consumers to Amazon’s more deluxe services.
“The main point is to bring in more users that you can eventually up-sell to Prime, or to get to a broader audience that doesn’t want to pay for Prime, in order to increase their video share,” a source told the newspaper.
It is unknown whether the service will be free or if a monthly fee will be charged. For several of Amazon’s original television shows, the first few episodes were free and then a Prime subscription was required to keep watching.
Amazon has built an online empire by slashing prices lower than other online retailers and brick-and-mortar stores. The company’s strategy is founded on streaming revenue based on sheer volume of sales – which would make it a strong contender against an established service like Hulu.
Amazon has not commented on the rumors.
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