Amazon will incorporate the LOVEFiLM Instant video service as part of Amazon Prime Instant Video, bundled with the Amazon Prime delivery scheme. Amazon acquired London-based LOVEFiLM in 2011, having been a shareholder since 2008. Bringing the online video service under the Amazon brand, following the model established in the United States, comes in response to increasing competition from Netflix.

LOVEFiLM Instant offers unlimited streaming of over 15,000 movies and television episodes for a monthly subscription of £5.99, or just under £72 a year. Amazon Prime offers an unlimited free one-day delivery service on many products from the Amazon online store for an annual subscription of £49.

The two schemes will be combined and offered for £79 a year, which Amazon presents as a 35% saving. Existing Amazon Prime customers will receive both services until their renewal date and customers who sign up for a 30-day free trial before February 26 can lock in the lower £49 annual rate.

“We’ve worked hard to offer the best selection of TV shows and movies for Prime Instant Video-in fact, we’ve more than tripled selection since LOVEFiLM became part of the Amazon family,” said Tim Leslie, Vice President of Amazon Instant Video for the UK and Germany. “We also added high-definition video and introduced apps for popular devices like Xbox One, PlayStation 4, Samsung and Sony TVs and iPads and iPhones.”

Amazon says it is investing heavily in titles as well as its own original programming. Amazon Studios is due to release a number of titles and recently released ten pilots from established producers.

Amazon does not disclose the numbers of Prime members or users of its online video services. It has hinted that it has gained millions of new members in the recent quarters.

Netflix, the market leader, now has 31.7 million paid members in the United States and 9.7 million in over 40 other countries, including the United Kingdom, with ambitious plans for further expansion in Europe.

It was difficult to see how LOVEFiLM could remain competitive as an independent online video brand. Its DVD rental service will continue for the moment. As part of the Amazon brand, the instant video offering will benefit from the addition of the popular free delivery service but it represents a significant price increase for those that only want online videos.

Amazon has a strong brand and reputation for customer service and is investing in programming, distribution infrastructure and consumer devices, like its Kindle Fire range of tablets. With its existing logistics operations, it can also continue to fulfil the demand for packaged media as well as online services.