Amazon: One Console Down, One to Go?

I'm half-excited about some news out of Amazon (NAS: AMZN) : Prime Instant Video is now available on Sony's (NYS: SNE) PlayStation 3.

I'd be more excited had Prime Instant Video shown up on Microsoft's (NAS: MSFT) Xbox 360 instead. In fact, its appearance on one of my two gaming consoles was one of the things I thought Amazon needed to do in order to truly challenge Netflix (NAS: NFLX) for video streaming dominance. But at least it's a step in the right direction.

Xbox Live versus PlayStation Network
Microsoft refreshed its Xbox Live interface last fall in an attempt to make the system more of an entertainment hub and less strictly a gaming system. It appears to be working, with even more time spent watching movies and playing music than playing video games. This was helped by the latest addition to content, with Time Warner's HBO Go, MLB.tv, and Comcast's (NAS: CMCSA) Xfinity TV service joining the fray last week. Even better for Comcast subscribers, streaming movies through the new Xfinity app won't count toward a customer's monthly data limit.

By adding Amazon Instant Video, PlayStation Network finally has something Xbox Live does not. After numerous service outages in 2011, caused by repeated attempts by hackers to access the system, PlayStation Network often fell behind Xbox Live when it came to services beyond playing Call of Duty with friends. Both services have long offered Netflix, Hulu, and organic video-purchasing services, but the addition of Amazon Instant Video to PSN's offerings added over 17,000 free (to Prime subscribers) television shows and movies, as well as an additional 120,000 titles for purchase or rental.

What does it all mean?
There is more to the video-streaming game than Amazon Prime and Netflix. Both Apple and Google are rumored to be working on a video service, but without specific details it's hard to know what Apple TV might look like, or whether Google will move beyond limited YouTube pay-per-view options. However, the addition of Amazon Prime to a console with nearly 63 million global sales could be the first step to making Amazon Instant Video a real player in the market. With more users able to buy or rent its video offerings, it should be able to afford buying content and adding to its small but growing digital library.

Is Xbox Live the next platform for Amazon Instant Video? It's hard to say, but one way to keep abreast of the latest developments is to add Microsoft or Amazon to My Watchlist. You'll receive updates, should any new developments in the streaming war affect these two companies. Click here to add these companies to My Watchlist.

At the time thisarticle was published Fool contributor Robert Eberhard owns a PS2, an Xbox 360, and an Amazon Prime subscription, but he holds no position in any company mentioned. Follow him on Twitter or click here to see his holdings and a short bio. The Motley Fool owns shares of Google, Microsoft, Apple, and Amazon.com. Motley Fool newsletter services have recommended buying shares of Amazon.com, Apple, Google, Netflix, and Microsoft, as well as creating a bull call spread position in Microsoft and Apple. The Motley Fool has a disclosure policy.
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