Image source: Amazon.

What happened?

E-commerce giant and serial disruptor (NASDAQ:AMZN) is launching a new video service intended to challenge Alphabet's (NASDAQ:GOOG) (NASDAQ:GOOGL) YouTube directly. Much like YouTube, Amazon Video Direct allows users to upload their own original or licensed content. The user is then able to choose from a wide range of monetization options, such as earning royalties based on hours streamed by Prime members, among others. Alternatively, the user can offer the video for free.

Amazon is also offering a bonus promotion in an effort to get the service off the ground. Amazon will split up $1 million per month to the top 100 videos that are included with Prime. The amount of the bonus will depend on engagement and hours streamed.

Does it matter?

Amazon and Alphabet are no strangers to competing, but the two companies have escalated their competition within video and live-streaming over the past few years. Amazon acquired video game live-streaming site Twitch in 2014 for nearly $1 billion, only to have Alphabet launch YouTube Gaming shortly thereafter.

With Amazon Video Direct, Amazon is turning the tables and attempting to copy YouTube's core user-uploaded model, but it will face an uphill battle considering YouTube's utter dominance in the space. Naturally, there is a twist, though: Just about everything Amazon does these days somehow feeds back into its Prime business, and Amazon Video Direct is no different.