Starting today, 
Amazon Prime customers can take advantage of the company’s new, unlimited video streaming service. Amazon Prime Instant Video is free, with a few caveats. Quoting from Engadget:
This is only for paid Prime subscribers, so if you’re a college student or the like with a free membership you’re sadly out of luck. Also it’s US only at this point.
Of course, comparisons to Netflix are inevitable here. Early reports say that Amazon’s catalog of titles is comparable to Netflix, while the quality of Prime’s video has been so-so. Prime Instant Video will have some ground to make up if it wants to compete toe-to-toe with the market leader.
Amazon streaming is missing from a few key set-top boxes, including video game consoles and TiVo.
There are 180 million current generation video game consoles on the market, and they all offer Netflix. So that means that Netflix is in more components, has a larger content library and offers higher quality video.
Which is not to say that Amazon is DOA. Not by a long shot.
It would be interesting to know what the goal of Prime Instant Video is. Do Bezos and company want more people to pay for Prime shipping, or is this offer aimed at getting people used to watching videos on Amazon and – later – purchasing media from their ecosystem?
Amazon can assemble a formidable library of content. They don’t need the same titles as Netflix, but the shows and movies need to be compelling. To win here they need to offer a blend of new releases and older classics (think TNT shows and the kind of programming you chill out with on a Sunday afternoon). Expect the library to mature as the service does.
Amazon could also white label Prime Instant Video and let other content providers offer their videos over the Prime streaming media center. The troubled Blockbuster brand could find new life here as a streaming only service (although at this point we’re not even sure if Blockbuster knows what streaming video is).
Finally, Amazon needs to get on as many pieces of hardware as they can. If people can only use Prime Instant Video on their desktop, it will have limited value. One of the first goals needs to be getting on gaming consoles, mobile devices and televisions. Again, this is an attainable goal, especially for Amazon.
I have always maintained that there can be more than one “winner” in the streaming media wars and there is certainly room for Amazon’s service to grow alongside Netflix. While the two services will probably compete for some customers, one does not have to lose for the other to win. It is clear, though, that the stakes of the online distribution game have just been raised.