Amazon Beams Up CBS; Major Step In Instant Video Competition With Netflix

After Netflix (NSDQ: NFLX) announced its new pricing scheme last week, comments started flowing about *Amazon* Prime Instant Video and its appeal as an alternative. The Amazon (NSDQ: AMZN) instant streaming service, offered as part of its $79-a-year premium shipping plan, got more appealing today with the addition of 2,000 episodes from CBS (NYSE: CBS). One measure of how important the deal is to Amazon, even though it is non-exclusive: the announcement was made by CEO Jeff Bezos with CBS CEO Leslie Moonves.

The equalizer: neither service has access to past seasons of current shows from CBS. The Amazon deal is roughly the same in terms of scope. It includes 18 full series, among them all of Star Trek, The Tudors, Numb3rs, Medium, Frasier and Cheers. That leaves Hulu Plus, which lacks CBS but has NBC (NSDQ: CMCSA), ABC (NYSE: DIS) and Fox, as the only subscription service with current episodes.

Currently, Amazon Prime Instant Video includes more than 6,000 movies and TV shows. The CBS content will boost it by roughly 33 percent to 8,000 when it’s added later this summer. Titles will vary between the Prime version and Amazon Instant Video, which will increase by several thousand titles later this summer as well; as is the case with iTunes, new episodes of current shows usually will be added for rental or purchase as shows the day after they air on TV.

Key differences: It also includes “dozens of shows” to buy or rent through Amazon Instant. Netflix is subscription only but Amazon’s video offerings are built to challenge both Netlfix and iTunes. More important for consumers, particularly those who like portability, for now Amazon Prime Instant is limited to PC, Mac and connected TV. It’s compatible with more than 300 devices but none are mobile or portable. That gives Netflix the iOS advantage hands down — if you want subscription video on an iPad or iPhone, stick with Netflix.

But portable access should change soon: Amazon is expected to release at least one tablet and possibly more in coming months. I’ve confirmed the deal covers connected access on all devices.

CBS: For CBS, the deal shows off Moonves’ strategy for leveraging every possible cent out of the library. Wells Fargo analyst Marci Ryvicker went all capitals on it in her morning note, saying it should add over $100 million in revenue and calling it a “big positive for CBS” that “underscores the growing importance and success of the ‘content’ side of the house.” She pegs the CBS deal at 18 months and suggests the structure is a little shirter than the Netflix deal with some fees per-sub, not all up front.

More to come.