Amazon is starting a video-only subscription service to rival Netflix, showing that the movie-streaming introduced five years ago as a customer retention tool has grown into a potentially lucrative stand-alone service.

The company also revealed a monthly payment option for Amazon Prime, the service targeted at frequent online shoppers that previously cost $99 a year for free shipping on many orders, as well as video and music.

Prime Video, which includes on-demand access to thousands of movies and original Amazon productions, will cost $8.99 a month. Amazon Prime will be available on a monthly payment plan of $10.99.

The video plan and new monthly payment for Amazon Prime show the US company is catering to customer calls for more flexible options than a year-long commitment. Those making the annual payment will get a 25 per cent discount compared with monthly rates.

Amazon began experimenting with a monthly payment option for Amazon Prime members through a partnership with Sprint Corp. last month.

Reuters