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Amazon Takes Aim at Netflix With Monthly Prime Membership

In its most direct challenge to Netflix yet, Amazon on Sunday debuted a new Prime subscription option for monthly video streaming, unbundling access to the service from other Prime perks like free two-day shipping, music and e-books.

Read More: Amazon Offers Prime Membership for $67 for 1 Day

For $8.99 a month, customers can get access to Amazon Prime Video's library of movies and TV shows, which undercuts Netflix's middle-tier "standard" monthly subscription price for new customers by a dollar. Existing customers who paid $7.99 a month had their subscription price grandfathered in, although that price guarantee expires next month.

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Both Amazon and Netflix have been investing more in video content as the competition between the two grows. Jay Marine, vice president of Amazon Instant Video in Europe, told CNBC last year that the company would "double down" on its investment in video and audio content, after spending $1.3 billion on Prime Instant Video in 2014.

Read More: Amazon Prime Now Has 54 Million U.S. Members, Report Says

Along with Sunday's new unbundled video-only offering, Amazon also tweaked pricing for its flagship Prime memberships. When it announced its most recent quarterly results in January, Amazon said Prime membership grew by 51 percent over the year.

Now, subscribers will have the choice of paying Prime's $99 annual fee upfront or signing up on a month-to-month basis for $10.99. That works out to about $33 more over the course of the year, but doesn't require an annual commitment.