Amazon is planning to use the sale of the company’s new Prime service to fund a subscription-based Amazon video-on-demand service called Amazon Prime Video.
The service will be available in some regions for $99 a year.
In order to make this work, Amazon needs to get more people to subscribe to Prime.
“Prime Video is Amazon’s answer to Netflix,” said Brian Wieser, an analyst at Wedbush Securities.
“If we can get more customers to subscribe, then we can increase our revenue.”
That revenue will be used to pay for a subscription service that will be exclusive to Amazon Prime subscribers, as well as to pay the bills for those subscribers who are still paying for other services.
The company says Prime Video will start shipping in October, and that it will be free to subscribers in the US.
“We’re looking forward to being the leader in the streaming world, and we’re thrilled to partner with Amazon Prime to bring customers the best video experiences,” said Amazon Chief Operating Officer Jeff Bezos.
The $99-a-year Prime Video subscription will cost $69 a month, or $7 more than Netflix.
The plan will also allow Amazon to raise more money by giving away additional perks.
Amazon also plans to offer a subscription to Amazon’s Kindle e-reader, a device that was released in April that has been widely hailed as a revolutionary way to read and use e-books.
The Kindle has a large screen, high resolution, and Amazon says it is able to do all these things without requiring a huge investment in the device.
Amazon has previously sold more than $1 billion worth of Kindle devices.
It also plans for Amazon to sell additional e-readers for its own devices and expand its Prime Video service to include more video.
“This service will become a real revenue driver,” said Jeff Bezos, “and a major part of our long-term growth plan.”