Amazon (NASDAQ:AMZN) just might just launch a brand new cheap video streaming option. But would Amazon be doing it at their cost or outsourced? We’ll soon find that out. A report in the NY Post confirms Amazon’s plans to present an advertisement included video streaming service, from sources that are familiar with the situation. This service will be made available the next year. The post however didn’t clarify if the service will be free of cost or not.

But the post did quote Wedbush reporter Michael Pachter, who suggested that the service will be different from Prime and its price would be below Netflix’s current price of eight dollars per month. Furthermore Patcher says that it would be a Netflix competitor. It wouldn’t be surprising if Amazon’s advertisement including video service under cuts Netflix. Amazon.com (NASDAQ:AMZN) Prime only costs $ 99 a year that makes $ 8.25 a month.

This contains unlimited Photo storing, first-class music service, Kindle’s library and free shipping for two days on the numerous items available on Amazon.com’s (NASDAQ:AMZN) main retail site. Netflix still has the market leadership as it has more than 53M streaming subscribers whereas according to a New York Post report only 25M of Amazon’s estimated Prime subscribers use Prime video.

But Amazon (NASDAQ:AMZN) is able to offer the video streaming service alone at a cheaper price or absolutely free maintain its same content line up then there’s no doubt that Amazon will give a tough time to its competitors by assembling new subscribers. This would not only help  Amazon.com (NASDAQ:AMZN) to generate revenue form the advertisements but according to a New York Post report Amazon’s primary aim would be to gain new members that would be later enticed into buying the Amazon Prime membership.

This seems to be a great plan for Amazon but the problem with this plan would be that such a cheap quality video streaming might harm Amazon.com (NASDAQ:AMZN) Prime itself as it is the one of the biggest driver for  consumers to sign up for Amazon Prime. Although if a satisfactory percentage of Amazon.com (NASDAQ:AMZN) Prime’s 25 million video users base gets attracted to the broader reaching Amazon prime membership then Amazon’s cheap advertisement included video could then gain a larger number of consumers who would have otherwise stayed with $99 a year subscription.

In addition to it we can easily see that Amazon would want to target the customers who have not yet subscribed to Amazon Prime and Amazon is going to do it through their cheaper advertisement included video service but if this happens or not is something we will have to wait and see. Investors should have a close watch on the result of the new ad supported video streaming service as the Prime customers are the one who have purchased more from  Amazon.com (NASDAQ:AMZN) retail outlet than the non-Prime shoppers and therefore Investors should have an eye on it.

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