Amazon’s looks to challenge Netflix with stand-alone streaming

NEW YORK (AP) – Amazon.com Inc. is taking on Netflix and Hulu with its own stand-alone video streaming service, just weeks before Netflix raises prices for longtime subscribers.

New customers can now pay $8.99 a month to watch Amazon’s Prime video streaming service. Previously, the only way to watch Amazon’s videos was to pay $99 a year for Prime membership, which includes free two-day shipping on items sold by the site, and other perks.

At $8.99 a month, Amazon’s stand-alone streaming service is $1 less than Netflix’s standard membership and $1 more than Hulu’s basic subscription.

Netflix said earlier this year that a “substantial number” of its longtime members who paid $7.99 monthly – and have been protected from price hikes – will now pay an additional $2 starting in May.

Amazon’s decision to break off its video streaming service could cause some defections at Netflix, wrote Wedbush analyst Michael Pachter in a note to clients.

Both companies have invested heavily in original and exclusive programing. Netflix has “Orange is the New Black,” ”House of Cards” and a couple of series based on Marvel comic characters. Amazon’s offerings include “Transparent,” ”Mozart in the Jungle” and previously aired HBO shows. With Hulu, users can watch many current TV episodes a day after they air on a network. Hulu is also growing its exclusive offerings, with “The Mindy Project” and “Difficult People.”

Netflix Inc. declined to comment Monday. Representatives for Amazon and Hulu did respond to a request for comment.

Amazon may be a rival, but Netflix is also an Amazon customer. The Los Gatos, California-based streaming company uses Amazon Web Services to store its content and help run parts of its site and apps.

Besides its stand-alone video service, Amazon is also offering a new pay-as-you-go option for its full Prime membership for $10.99 a month and comes with free two-day shipping, video streaming and other perks. Amazon’s website said that users who opt to pay $10.99 monthly, instead of the $99 annual fee, can cancel at any time. The $99 a year option remains the cheapest way for most people to get both free two-day shipping and video streaming, equaling about $8.25 a month.

Shares of Seattle-based Amazon.com Inc. rose $5.22 to $630.11 in afternoon trading Monday. Netflix Inc. shares fell $4.44, or 4 percent, to $107.07.

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