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Amazon.com Inc. (AMZN - Analyst Report) announced content licensing agreements with Turner Broadcasting System, Inc. & Warner Bros. Domestic Television Distribution, extending the archive of television shows and films currently available on its streaming video site, Amazon Prime Instant Video.

Amazon Instant Video is a digital video streaming and download service that lets users rent, buy or subscribe to a range of video content.

The online retailer has been consistently upgrading and promoting movies and television shows on its streaming video service. Over the past 12 months, Amazon has entered into a number of deals with every major Hollywood studio, as well as some of the major cable networks. In September this year, Amazon signed a deal with EPIX, taking the number of videos to a total of 25,000.

The latest deal with Turner & Warner will expand Amazon’s already-large selection of movies and television shows available to customers as part of their Prime membership. Amazon said that the epic TNT drama series Falling Skies and The Closer will now be available on Prime. Prime subscribers can now access all seven seasons of The Closer as well as the current and future seasons of Falling Skies on Prime Instant Video at no additional cost.

The deal will add two leading TV series to Amazon's video streaming library, making it a significant force in the video streaming segment and increasing competition for Netflix Inc (NFLX - Analyst Report) and Apple Inc. (AAPL - Analyst Report). Prime Instant Video now features more than 30,000 movies and TV episodes for Amazon Prime members to stream on Kindle Fire HD, iPad, iPhone, iPod touch, Roku, Xbox 360, PlayStation 3 and Wii U.

We believe that one of the key strategies for Prime Instant Video remains the expansion of its video archive. Netflix has seen the benefits of such an expansion in recent times, in spite of it instituting rate increases. Netflix’s Internet video library is estimated to have more than 60,000 titles, far more than Amazon's service.

However, Amazon's vast offerings at discounted rates ($79 per year for Prime shipping service versus Netflix charges of $95 per year for its streaming video service) could create a price war in the digital delivery of movies. Amazon’s additional advantage is a steady customer base since Prime offers several other advantages (related to online shopping for example) compared to Netflix.

Amazon is one of the leading players in an extremely fast-growing market. In the third quarter, Amazon’s revenue of $13.81 billion was better than the guidance and in-line with consensus expectations. Management attributed the increase in revenue to the growing consumption of digital content across different categories owing to the advantageous value proposition Amazon was able to provide to its customers.

Amazon currently retains a Zacks #3 Rank (Hold). Amazon’s competitors (whether direct or indirect) are eBay Inc. (EBAY - Analyst Report), which retains a Zacks #2 Rank (Buy), and Barnes & Noble, Inc. (BKS - Snapshot Report) and Google , both os which carry a Zacks #3 Rank (Hold).

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