Amazon's streaming video service may stray from the Netflix recipe by adding new marketing ingredients that would make it more like Hulu's two-tiered offering.
Amazon is said to be working on delivering a free version of its video-streaming service, which, like Hulu and Crackle, would be supported by ads. News of the ad-supported version of Amazon's streaming video service stems from sources who reported the change to the New York Post.
Amazon's non-Prime members can already access a small selection of Amazon Instant Video titles which are supported by ads. But the Post's sources are indicating that Amazon is looking to expand it's ad-supported collection to a service that would size up better with the premium platform, without serving as a true replacement.
"The main point is to bring in more users that you can eventually up-sell to Prime, or to get to a broader audience that doesn't want to pay for Prime, in order to increase their video share," one of the people said.
Not only would an ad-filled version of Amazon's streaming service attract more people away from rivals and serve as a carrot to eventually biting on Amazon Prime, the free version of the platform would enable the e-commerce company to cut the price on the premium version.
"If they do an ad-supported service, they will decouple it from Prime, and that is a Netflix killer," said Michael Pachter, a Wedbush Securities analyst. "It won't be $99 a year."
Pachter estimates the ad-supported version of the streaming service would bring the cost of premium accounts down to about $7.99, a buck cheaper than a Neftlix subscription.
Back in March, similar reports began to surface indicating Amazon was preparing a large-scale, ad-supported version of Instant Video. However, an Amazon spokeswoman shot down those reports.
"We're often experimenting with new things, but we have no plans to offer a free streaming media service," the spokeswoman said.
News indicating Amazon is preparing to expand its video service comes as the e-commerce company slowly gains ground on Netflix, though the latter service still rules during peak hours of the day and even beats out YouTube. Prime-time king Netflix accounts for 34.89 percent of downstream traffic on the Internet during peak hours -- Amazon Instant Video only accounts for about 2.58 percent.
Amazon's Prime strategy, however, has been working, as the $99 bundle of services has seen about half of its approximately 50 million subscribers spend time with Amazon Instant Video, a streaming video service that comes as part of the Prime program. Those 25 million Instant Video users rival the 33 million U.S. Netflix subscribers.
