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Netflix faces Amazon challenge

News, 19 April 2016

SEATTLE, WA: Netflix, the globally expanding video-streaming service, now faces a powerful rival in Amazon, which announced on Sunday that it is launching its own stand-alone option for its Prime subscribers in the US.

The online retailer had previously offered Prime Video in the US as part of its $99 annual membership fee, but now US consumers will have the option of paying $8.99 a month to stream videos, the Wall Street Journal reported.

There is also an additional option, priced at $10.99 a month, which allows users the full benefits of Amazon Prime, including free shipping, music streaming and other services.

By providing customers with the flexibility of monthly membership, Amazon is making a concerted assault on territory long-dominated by Netflix, which offers several pricing plans ranging from $7.99 to $11.99 a month.

Michael Pachter, an analyst with Wedbush Securities, said Amazon chief executive Jeff Bezos was "absolutely escalating the arms race with Netflix".

"The two services will compete more closely for customers, and Amazon has the marketing advantage by offering the full Prime service for just a little bit more each month," he said.

According to the Journal, it raises the prospect of consumers taking out a month's subscription to Amazon Prime around the Black Friday shopping event when they may complete all their Christmas shopping while making use of Amazon's two-day shipping service.

But it is not just in the US where Netflix is facing stiffer competition because a growing number of media start-ups in Southeast Asia and India are offering low-cost alternatives, Quartz reported.

These include video-streaming companies, such as Eros, MyPlex and Hooq, among many others, which appeal to Indian and Asian users because of their low pricing models and greater provision of local content.

Hooq and iFlix are reported to be the lead players in Southeast Asia where they offer an even split between local and Hollywood content.

Significantly, they charge $2 to $3 per month, compared to Netflix's charge of $7 to $10, which tends to limit its reach to just higher earners.

Data sourced from Wall Street Journal, Quartz; additional content by Warc staff