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Amazon.com Inc. (AMZN - Analyst Report) announced a content licensing agreement with A+E Networks, 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 deal with A+E Networks will expand Amazon’s already-large selection of movies and television shows available to customers as part of their Prime membership. Amazon said that popular shows from A&E, bio, HISTORY and Lifetime channels will now be available on Prime.

The deal will add TV episodes from some of the highest rated television reality shows like Pawn Stars, Storage Wars and Dance Moms 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).

Last September, the online video rental company Netflix had lost the rights to many of these shows due to the expiration of its term,with only a few older Biography that remain available on Netflix. Though this deal is a big blow to Netflix, threatening its leadership in a growing market, its Internet video library is estimated to have more than 60,000 titles, still far more than Amazon's service.

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. Prime Instant Video now features more than 33,000 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.

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 guidance and inline 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.

Currently Amazon retains a Zacks #3 Rank (Hold).

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