Amazon (s AMZN) unveiled its Kindle Fire tablet Wednesday, announcing what is expected to be the first widely adopted tablet based on Android. (s GOOG) The Kindle Fire not only marks the first real competition to Apple’s iPad, (s AAPL) but could also position Amazon’s Prime Instant Videos as a real threat to Netflix. (s NFLX)
Priced at just $199, the new 7-inch Kindle Fire will likely sell millions of units as soon as they it’s available, which would be unprecedented demand for an Android-based tablet. But just as importantly, each new tablet comes with a 30-day free subscription to Amazon Prime, which means millions of new users will immediately have access to the company’s Prime Instant Videos service.
While it’s unclear how many of those users will choose to subscribe to the $79 a year Amazon Prime service after the free trial ends — or how many Kindle Fire customers are already subscribers — the packaging of a free video service on the tablet has the potential to be a game changer in the streaming video world. Until now, even those who subscribe to Amazon Prime might not be aware that in addition to free shipping they also get free access to more than 11,000 movies and TV titles. But making Amazon Prime Instant Videos available in the palm of their hands (and free! for a limited time) could convert a number of users over to the service, which is looking like the first real threat to Netflix.
That threat couldn’t come at a worse time for Netflix, which is still dealing with the hangover of a poorly communicated price change and the re-branding of its DVD business. Netflix’s DVD service is now called Qwikster, and its operations will be run separately — a change that has baffled investors and has many subscribers looking for alternatives. Amazon Prime Instant Videos could be one alternative they latch on to.
At $79 a year, Amazon’s subscription video service is priced slightly below the $7.99 a month Netflix subscribers pay — although for many consumers it’s easier to commit to a lower monthly subscription cost than one big yearly payment. And the service is available on more than 300 connected devices. That’s not as large as Netflix’s footprint, but it’s close enough that consumers will likely have access to both services on newer connected TVs or Blu-ray players.
So will the Kindle Fire become the gateway drug to wider Amazon Prime Instant Videos usage? At the very least, it’ll get the service in the hands of millions of new potential subscribers. With Netflix on the ropes, that could be all the new subscription video service needs.