Amazon reportedly launching free, ad-supported video service (updated)

Amazon is set to launch a free, ad-supported video service separate from its $99 Prime Instant Video offering, according to the New York Post. In case you're having deja vu, the WSJ reported exactly the same thing back in March and Amazon firmly denied it. However, the Post confidently said that the offering is now a definite "go." One of its sources for the rumor is a potential advertiser, which said Amazon would unveil the service in order to increase its video share against arch-rival Netflix -- and ultimately tempt users into Prime memberships.

Amazon (sort of) offers limited ad-supported streaming now, by letting non-Prime users watch a limited selection of Prime shows with commercial breaks. If the Post's report proves accurate, the launch of a larger ad-supported streaming service may mean that the current version successfully enticed Amazon customers to buy Prime. Amazon recently scored a deal to stream classic HBO programs like The Sopranos and Six Feet Under in a minor coup over Netflix. But it still has less than a tenth of its competitor's size -- and we imagine that "free" looks pretty good to a lot of users, ads or not. So far Amazon hasn't commented on the matter, but we've reached out for more information.

Update: Amazon told us it has "not announced any plans to offer an ad-supported video streaming service." That doesn't mean that it won't, though, so let us translate that into non-PR-speak for you: "No comment." Its full statement is below.