Netflix also said it expects Amazon's standalone service to be priced below its own service.

Netflix made the prediction in a letter to shareholders that was posted on its website Wednesday.

The company warned in the letter that it will face increased competition from Amazon, Hulu and other businesses as viewing solutions for TV shows and movies proliferate and improve.

"One class of competitors is the other over-the-top pure plays such as Hulu Plus and Amazon Prime," Netflix said in the letter. "We expect Amazon to continue to offer their video service as a free extra with Prime domestically but also to brand their video subscription offering as a standalone service at a price less than ours."

Amazon Prime is a $79-a-year service that provides two-day free shipping in the U.S. and free access to thousands of TV shows and movies streamed over the Web and via devices like the popular Roku TV box.

A spokesman at Netflix declined to comment, as did a spokeswoman at Amazon.

(Reporting By Alistair Barr; Editing by Bernard Orr)

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