Amazon (NASDAQ:AMZN) has announced that it will offer options to subscribe to its Prime membership service, separating the Amazon Prime video service from the rest of the prime services. The change makes Amazon’s video services a more direct competitor to Netflix (NASDAQ:NFLX).
The popular online retailer revealed the monthly prices to the new services. The first offers to stream movies and television shows from a new video-only version of its Prime service, which will cost $8.99 a month. The second will provide all the familiar perks of the Prime including video streaming, free two-day shipping on Amazon orders, music streaming and more, which will cost $10.99 a month.
By giving an option to subscribe only to the Prime video service, Amazon may tap into Netflix’s market share, and a reaction in the stock market was expected. Shares of Netflix fell more than 3% after Amazon’s announcement.
According to Mark Mahaney, analyst with RBC Capital Markets, "Amazon certainly has the brand name, the customer relationships, and the focus on high-quality consumer experiences to impact the growth in Netflix’s U.S. subscriber base, and perhaps eventually its global subscriber base,"
Netflix is a leader in the streaming industry with more than 75 million subscribers around the world. Amazon is not very far behind. According to a research by Piper Jaffray, Amazon’s total number of Prime subscribers currently between 57 million and 61 million.