Butch Cassidy: "They'll never follow us."
Sundance Kid: "How do you know?"
Butch Cassidy: "Would you jump if you didn't have to?"
Sundance Kid: "I have to and I'm not gonna."
-- from Butch Cassidy and the Sundance Kid (1969)
This morning, the company announced it has inked a video licensing deal with News Corp.'s
Prime's Instant Video offering now tops 11,000 titles available to members, more than twice the 5,000 available when the service debuted in February. A few short months ago, Amazon had brought the offering up to around 8,000 with a similar deal with CBS
Even though Prime's streaming library remains much slimmer than Netflix's, the value proposition is already compelling and becomes even more so as Amazon aggressively grows its arsenal. At $79 annually, it comes out to around $6.58 per month, 18% cheaper than Netflix's monthly $7.99. Incidentally, I actually signed up for my free trial last night just to take advantage of the free two-day shipping, but I may just end up keeping the service for the Instant Video.
Amazon is pushing Prime hard and it's going to pay off. While bundling streaming video with free two-day shipping may seem like a crazy combo, it's actually brilliance in disguise. It all comes back to building a moat. Amazon Prime members pay for a service that makes it more likely for them to shop on the site, its core business. Throwing in the Instant Video on the house just makes Prime that much more appealing and indirectly encourages you to keep buying stuff, since it will arrive on your doorstep in two days for free.
Fool contributor Evan Niu owns shares of Amazon.com and hopes his free trial of Amazon Prime doesn't make him 1-Click trigger-happy, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Netflix, DreamWorks Animation SKG, and Amazon.com. Motley Fool newsletter services have recommended creating a bear put spread position in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.