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Amazon's Kindle Fire Poses Threat To Netflix

NEW YORK ( TheStreet) -- Amazon's (AMZN - Get Report) new tablet could pose a formidable risk to Netflix (NFLX - Get Report).

The Kindle Fire, which is currently available for pre-order for $199, allows users to stream movies and televisions shows through Amazon Prime.

Amazon is offering a 30-day free trial to Amazon Prime to those who purchase the device. The Amazon Prime membership, which typically costs $79 a year, provides free shipping on all Amazon purchases and access to more than 11,000 streaming videos. The free trial may introduce people to Amazon's streaming service who never have heard of it.

In comparison, Netflix's streaming-only plan costs $95.88 a year, giving access to about 20,000 streaming titles.

"The device is low cost and a new interface for consumers to find media," said Janney Capital Markets analyst Tony Wible. "I think the device is more of a media player with an aggressive price that will spur adoption."

Amazon has been beefing up its content offerings, most recently striking a deal with Fox to stream its movies and television shows.

At $199, it seems Amazon is even willing to use the Kindle Fire as a loss leader to push its digital products, Wible said.

Amazon Prime is available on more than 300 connected devices, which is less than Netflix, but the gap isn't wide enough for consumers to really notice a difference.

Amazon couldn't have asked for a better time to try to convert users to its Prime Instant Video. Netflix has been grappling with its own strategic blunders that have led many subscribers to cancel their service.

"At the very least, Kindle Fire will enable owners to watch Amazon films on airplanes and elsewhere," said Needham analyst Charles Wolf. "It's not a deal breaker. But it's just one more weapon in what appears to be the start of or an escalation of hostilities."

-- Written by Jeanine Poggi

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