SAN FRANCISCO — Amazon.com said Tuesday morning that it has launched a video-streaming plan for subscribers to its Prime service — in direct competition with Netflix Inc.

Amazon said it will allow subscribers to its Prime service the ability to stream unlimited, commercial-free movies and TV shows. The company said more than 5,000 titles are available through the service.

Prime customers pay $79 a year for access to free, two-day shipping on most orders from the online retail giant. The video streaming service will be available free of additional charge to these subscribers, Amazon said.

While Amazon allows customers to buy and download movies and TV shows, this is the company’s first entry into the subscription streaming space. As such, it may mean more competition for Netflix, which currently leads the market for both mail-order DVD rentals and streaming-only subscription plans.

Netflix offers a streaming-only plan for $7.99 per month — or about $96 per year, making it more expensive than the Amazon plan.

“Amazon’s intentions are definitely clear — they want into this space,” said Atul Bagga of ThinkEquity.

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Bagga noted, however, that Amazon will be hard pressed to match Netflix in signing deals with studios for online streaming. He also said Netflix has an advantage in that it has geared its service to be more about discovering unknown movies rather than focusing on popular new releases.

“Netflix is not so much about renting the top videos, it’s about discovery, which lowers the cost for them,” said Bagga, who carries a buy rating on the stock.

Shares of Netflix slipped nearly 5 percent to $223.88 by Tuesday midday on the news. The stock set a new all-time high last week at $247.55 — up more than 40 percent since the start of the year. Amazon shares were down about 2 percent to $182.62.

“Competition is good for consumers and the studios, bad for Netflix,” said Michael Pachter of Wedbush Morgan, who carries a sell rating on Netflix shares.

Netflix will not say how many titles it has available for its streaming plan, beyond a spokesman’s description of “thousands and thousands.” Pachter of Wedbush believes Netflix has about 20,000 titles available for streaming.

Data released by Nielsen last week said the company served more than 200 million video streams during the month of January, up more than 37 percent since December but still below that of large video sites such as Google’s YouTube and Hulu. Google and Apple are the most frequent companies also rumored to be interested in the movie-streaming market.

Netflix got a boost last month when it reported that net income surged more than 50 percent in the fourth quarter, boosted by a large number of customers signing up for its streaming-only plan.


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