Amazon May Launch Free Streaming Service To Compete Against Other Streaming Services

Amazon, which is looking to best rivals like Hulu and Netflix, may decide to launch an ad-supported, free streaming video service sometime next year.

There isn’t much in the way of news regarding the possible new service and Amazon isn’t sure what the new service will be called. However, it is set to be free and not be tied to the company’s paid Amazon Prime. This service provides subscribers with unlimited video streaming.

According to Michael Pachter, an analyst with Wedbush Securities, should Amazon create an ad-supported service, it won’t be in conjunction with Prime and it could kill Netflix. He said it won’t cost $99. Pachter said if someone were poor or looking to cut the cord, this could be a worthwhile, lucrative option.

A person close to the Amazon plans said the Internet retailer is seeking customers who pick the free streaming option, then over time choose the $99 subscription to Amazon Prime. However, Amazon knows to increase its share of video streaming, it must compete against Hulu and Netflix.

According to the source, the key idea is to lure users in to eventually up-sell them on the idea of Prime, or to attain a broader audience who had no desire in paying for Prime so they can intensify their video share.

Amazon is thought to have around 50 million Prime members from around the world. 25 million of these users are thought to use the video service.

Along with video streaming, Amazon could stand to gain financially from the targeted advertising since it could tell if customers purchased products after seeing ads for them while they streamed their movies or TV shows.

Netflix has 32.39 percent share in broadband traffic whereas Amazon has a measly 2.58 percent of the traffic. Currently, there are 33 million U.S. Netflix subscribers.

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