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Amazon steps up Netflix fight with monthly Prime video subscription

Amazon is breaking out its video-streaming service in the U.S. with a standalone offering with a monthly subscription, as it looks to step up its challenge to Netflix.

U.S. customers will be able to buy an $8.99 per month subscription to Amazon Prime Video, the e-commerce giant announced on Sunday.

Previously, the only way to get Prime Video in the U.S. was by buying annual Prime membership for $99, which would give users access to the video-streaming service as well as other services such as music-streaming and unlimited fast shipping.

In the U.K., Amazon video is available on a monthly subscription basis for £5.99 ($8.50) a month. Its latest move is seen by analysts as the first steps in an international expansion for the streaming service.

"This significant move underlines the company's commitment to video and we firmly believe that the next step is to launch the new service overseas," Paolo Pescatore, director of multiplay and media at CCS Insight, wrote in a note on Monday.

"Its closest rival, Netflix, has done a phenomenal job of launching in many new markets within a short period of time and as a result, has a far greater reach and can benefit more from scale and of course early mover advantage. Offering video as part of Prime was holding Amazon back from launching into new markets, as there was little to choose from in terms of price."

Jeff Bezos, chief executive officer of Amazon.com
Matthew Staver | Bloomberg | Getty Images
Jeff Bezos, chief executive officer of Amazon.com

Amazon is available in just a handful of countries, including the U.S., U.K., Germany, Austria and Japan. In contrast, Netflix recently launched in 130 new countries and is by far the bigger player.

Both companies' streaming services have been investing heavily in original content as well as improving technology capabilities such as focusing on so-called high-dynamic range (HDR) content.

But Amazon has a larger number of services than Netflix, including its core e-commerce platform and devices such as the Kindle and Echo. Offering a standalone subscription could be a good ploy to cross-sell its other services.

"This could present a great opportunity for Amazon to sign up new subscribers and eventually cross-sell other services to them including a Prime subscription. Amazon is certainly building a strong set of capabilities in both hardware and services to compete with Netflix and others," Pescatore said.