Amazon is putting its own streaming twist on the traditional pay-TV bundle.
The e-commerce giant announced Tuesday that users who stream video under the company's Prime plan will now be able to watch Showtime, Starz and more than two dozen lesser known channels for an extra monthly fee.
Under the new initiative, called Streaming Partners Program, Amazon customers who pay a $99 annual fee for the Prime plan can expand their viewing choices with add-on channels, including Showtime and Starz and other content providers. The premium channels cost as much as $8.99 a month.
The additional pipeline of programming gives a boost to Amazon's library of original and acquired content at a time when the digital video landscape is teeming with options. Competitors Netflix and Hulu have also become more aggressive in building up their programming offerings as more consumers ditch or pare back their cable service.
The race is on to chase consumers who live in the more than 10 million U.S. homes that pay only for broadband Internet access with no cable package. Traditional pay-TV operators have struggled for years to come up with easy-to-use streaming options for their consumers.
"We think right now, what's happening, is the video industry lacks convenience," Michael Paull, vice president of digital video at Amazon, told The Times. "There are just too many apps to navigate through and customers have to have a cable subscription or they have to essentially wade through dozens of different apps through various providers. So we just saw the opportunity to aggregate it through one experience and simplify."
Financial terms of the initiative were not disclosed. Amazon will share in the subscription revenue, but the TV networks will retain most of the money, according to people familiar with the deal.
Seattle-based Amazon is giving Prime users a free trial on any subscription. A subscription to Showtime on Amazon costs $8.99 a month, lower than the standard price $11 on iTunes and other platforms.
Amazon is following in the footsteps of its rival Hulu, which in June unveiled a similar — though less robust — option to add Showtime's stand-alone service. Hulu charges the same extra monthly fee.
For the television networks like Showtime and Starz, such partnerships provide another platform to distribute their shows and another potential source of revenue.
There are promotional benefits as well. Amazon has agreed to market the new channels to its customers and handle all the billing matters, including making sure that credit cards have not expired, and customer service queries, a responsibility these networks have long relied on pay-TV operators to fulfill.
Amazon has a vast customer base. The company declined to disclose the number of Prime members, saying only that it was in the tens of millions. A recent Deutsche Bank estimate pegged the number at more than 75 million worldwide.
The channels are accessible through the Amazon Video app on TVs and mobile devices and Amazon products, such as Amazon Fire TV and Fire tablets.
"We want our brands to be ubiquitous," said David Nevins, president of Showtime Networks Inc., which is owned by CBS Corp. "We want to be good stewards of our content when we select distribution partners, and Amazon was an obvious one for us."
In addition to Amazon and Hulu, Showtime also is available on the Sony PlayStation VUE service.
The timing of the deal was propitious for the networks. The new streaming deals come during a typically fallow period for premium pay-TV services. But because Amazon receives so much holiday shopping traffic, a Showtime subscription suddenly might become a stocking stuffer for consumers looking to provide a gift to a friend or family member.
"December has always been kind of an off time for us, but this year, we think December is going to be one of the most important times of the year," Nevins said. In addition, some people will receive tablets for Christmas, and they too will want easy-to-stream programming.
Amazon has been expanding its role in Hollywood with several original productions, including the hit TV drama "Transparent." Monday's move does not signal a shift from its strategy to produce new shows or acquire others, Paull said.
"We've been considering ways to enhance the content programming that we can provide to Prime members," he said. "We've continued to increase our investment in Prime video, both in licensed content and originals ... we thought why not leverage the ecosystem we've created and start to work with a variety of different traditional and emerging video channels?"
"We wanted to have a nice bouquet of channels and services that covered a variety of different content categories and we want to build deeper into those categories going forward," Paull said.
The new service encompasses not just brand names such as Showtime and Starz but also a number of lesser known channels such as Gaia and Shudder for less than $6 each per month. The goal is to cultivate diverse audiences.
For example, Los Angeles-based independent program distributor, Cinedigm, was one of the inaugural partners with its three channels — Dove Channel, CONtv and Docurama — joining the Amazon Streaming Partners Program.
"Everybody is talking to everybody right now," said Chris McGurk, chief executive of Cinedigm. "You don't want to be left out in the cold in this brave new world."
Amazon expects to add more channels to its offerings. Sports and live programming could also be on the horizon.
"This is just the beginning," Paull said. "There's a lot to come and you'll see a lot of activity in 2016."