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Amazon takes on Netflix with free instant streaming

By Laurie Segall, staff reporter

NEW YORK (CNNMoney) -- Amazon edged into Netflix territory on Tuesday when it unveiled a free, instant movie and TV show streaming option for those who pay for its Amazon Prime service.

Amazon already offered "Instant Video" on its website, with sales and rental prices varying widely based on the content's age and popularity. A typical price point is $2.99 for a 48-rental.

Tuesday's announcement drops that price to zero for members of Amazon Prime, a service that offers free two-day shipping on Amazon merchandise in exchange for a $79 annual fee.

Amazon (AMZN, Fortune 500) said it is making 5,000 movies and TV shows available for free streaming. The offerings include the Swedish-language The Girl with the Dragon Tattoo trilogy, classic films like Amadeus and Chariots of Fire, and TV series such as "Fawlty Towers."

But the selection is a mere sliver of the 90,000 movies and TV shows in Amazon's complete Instant Video catalog.

For example, Amazon currently offers five of this year's 10 Best Picture Oscar nominees for instant streaming. None are included in the free Amazon Prime offer. If you want to watch front-runner The Social Network, it'll cost you $3.99 for a 24-hour rental or $14.99 to buy permanent viewing rights.

The move puts Amazon on a collision course with Netflix, which aims to dominate the online streaming market. Last year, Netflix hit a milestone: The majority of its 20 million subscribers viewed more of their TV shows and movies online through streaming than by mailed DVD.

A Netflix spokesman declined to disclose how many movies and TV shows the company makes available for instant viewing, saying only that its catalog includes "thousands and thousands" of content selections.

Amazon's foray deeper into the streaming market comes as another Netflix rival, Redbox, is also planning an onslaught. Best known for its $1 DVD rental kiosk service, Redbox said last week that it is readying an online streaming service.  To top of page

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