Amazon readies ‘Netflix killer’ video service

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Amazon will roll out a new, standalone video streaming service next year that won’t be bundled with a $99 Prime subscription, according to sources familiar with its plans. The retail giant hopes to take on rivals like Netflix and Hulu and undercut their prices in an effort to attract customers.

Amazon already has a popular video streaming service called Instant Video, but it comes bundled with a Prime subscription and users can enjoy is as much as they like without paying a penny extra. The new service, which will have an ad-supported option, will essentially service two purposes, New York Post reports.

Not only will it look to appeal to movie and TV show fans who do not want a Prime subscription, but it will also attempt to persuade some of them to upgrade to Prime eventually.

Rumors surrounding a new Amazon video service first surfaced back in March, but according to sources speaking to New York Post, “it’s a definite go.” The service is expected to make its debut early next year.

Amazon currently has around 50 million global customers, according to estimates from RBC Capital analyst Mark Mahaney. Only around 25 million of those take advantage of the Instant Video service included with it, while 33 million consumers subscribe to Netflix.

While it’s unclear at this point how much Amazon’s new service could cost, having an ad-supported option that will allow customers to watch their favorite shows and movies on-demand without paying a fee will surely persuade many to choose Amazon over its rivals — and perhaps even drop Netflix and Hulu subscriptions to switch.

“If they do an ad-supported service, they will decouple it from Prime and that is a Netflix killer,” Wedbush Securities analyst Michael Pachter said.