updated 12:10 pm EST, Wed January 25, 2012
Amazon Instant Video may go separate
Amazon might separate at least the subscription side of its Instant Video service to better compete in Internet video. A rumor late Tuesday from the New York Post had it breaking the subscription video out from its bundling with the $79 Prime service. Studios are reportedly unhappy that Amazon was following its traditional practice of using a service as a loss leader, presumably for setting unrealistic price expectations or treating movies and TV shows as afterthoughts.
The flat-rate video might be treated differently than the pay-per-title sales and rentals that Amazon first set up when it was competing more directly with iTunes. It's not clear whether this side of the service would join the subscriptions in the more distinct service, although it wouldn't necessarily have to make the leap.
Amazon isn't known to have a tentative price in mind. Officially, it hasn't commented on the rumor.
A split would be ostensibly meant to compete against Netflix and make sure that Amazon keeps getting major content, such as that from its deal with Fox. It could also help compete with iTunes and other stores that don't offer subscriptions but can claim more of a content advantage over Amazon Prime. Separate service may hurt the Kindle Fire tablet, however, since customers might either be denied a cheap way to get video content or be forced to choose between that and subscriptions for e-books and sped-up shipping.