5 Ways an Amazon Prime Video Streaming Service Could Best Netflix

Amazon appears to be fishing for an edge over streaming video kingpin Netflix with a reported new offering that would allow unlimited videos streaming of select Hollywood movies and TV shows for a flat $79 a year.

According to Internet reports, Amazon will extend its Amazon Prime service to include unlimited streaming of select movies and TV shows. Amazon Prime is a $79-a-year offering allows you to get two day and standard shipping for free on selected Amazon.com items and one day shipping for $3.99. The news comes from Engadget that grabbed screenshots of what appears to be an Amazon teaser posted for a short time on the site.

Image Source: Engadget. Engadget spotted this Amazon Prime preview that included video.

The pics purport that a "Watch now" button appears next to movie titles, in addition to text that reads, "Your Amazon Prime membership now includes unlimited, commercial-free, instant streaming of 5,000 movies and TV shows at no additional cost."

Though Amazon Prime Streaming is still a rumor at this point, the idea makes sense, and if Amazon does it right, I think it could be a phenomenal success.

Here are 5 ways Amazon can succeed with a streaming service:

Monthly Subscription Rate

An Amazon Prime membership costs $79 per year. Netflix's no-disc streaming-only plan is $95.88 per year, but because this is on a month-by-month basis, customers think they're saving money.

Configuring the economic model for Amazon Prime on a month-by-month basis might be tricky-and I'm certainly no accountant-but it's a sharp and simple marketing tool. Amazon could then compare and contrast Prime Streaming to other subscription models and win the price wars instantly.

Consumer-Friendly Pricing Structure

Amazon waged a tough battle against publishers back when Amazon's $9.99 e-book pricing cap was dismantled. Though the company lost, its willingness to fight showed how Amazon breaks spines to provide the lowest prices for its customers.

As Forbes mentions, Amazon's entrance into the streaming subscription world means more money flowing into movie studios:

"Netflix spent over $400 million in 2010 for rights to their streaming content. With their deal with Starz set to be renewed this year, they'll end up paying a lot more than that in 2011. Another player in that game could conceivably double the amount of money going to studios to license their content. And if Amazon wants to stream newer movies and TV shows, it will have to pay even more."

Amazon has the money, it has the consumer base, and it has a sterling reputation for providing Wal-Mart-worthy prices. Hell, it could even flat-out buy Netflix if it wanted.

Emphasis on Disc+ On Demand

Streaming video is popular, but a lot of people still want DVDs, and unless Amazon starts renting DVDs (highly unlikely) Netflix will have a leg-up. However, if Amazon emphasized Disc+ On Demand-a deal in which you buy a physical copy of a movie and receive a complimentary 2-day rental of the film via Amazon Video on Demand-it could appear as though it's as DVD-friendly as Netflix.

Also, Amazon could flip the model: you rent or stream a movie through VoD or Prime, respectively, and have the option to receive a physical disc with 2-day shipping. Brilliant for movie lovers and collectors.

Family-Sharing Plans

Here's an oft-forgotten fact that CNET reminded me of: Amazon Prime memberships can be shared with up to three "family members." Whether said sharing program would be included in a streaming plan is up for grabs, but it does present an interesting option-one that could even allow Amazon to offer "family plans" for discounted rates.

The Kindle Tablet

A robust video streaming service and a selection of almost 1 million e-books would make the Kindle Tablet a smart move for the future. Amazon likes that the Kindle e-reader is a dedicated device, and the Kindle Tablet could be the same: by ignoring Android and its apps, and creating a homemade UI, Amazon could again build and corner a niche market. Whereas the iPad does tons of things, the Kindle Tablet would do only two or three things-but wicked well.

If Amazon Prime Streaming is to be believed, Amazon has a long road ahead. Netflix Instant is on practically every device on the market-I wouldn't be surprised to see dishwashers with Netflix Watch Instantly emblazoned on the side. But if Amazon can assemble a decent package with the five homeruns above, it might just come out on top.

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