Amazon’s announcements today have given people a lot to jaw about. Thankfully, the focus of this website means I only need to talk about one of them: the $199 Kindle Fire.

This is the full-color tablet, running a custom skin of Android OS, which is meant to compete with the iPad by leveraging Amazon’s media ecosystem. And it being less than half the price doesn’t hurt either.

Some had speculated it would be $250 and come with a year of Amazon Prime membership. Instead, it comes with a month of free membership. Given that Prime costs $80/year, by my reckoning Amazon actually released this for $30 more than the rumored price. ($250+$0 vs. $200+$80.)

Either way, they are betting that you’ll need Prime to get the full juice out of it. Prime, you’ll recall, includes access to Amazon Instant Video a.k.a. Amazon Unbox, their Netflix Streaming competitor.

And that’s where the interest for filmmakers begins. On Monday, it was reported that Amazon made a deal with Fox for their library of content. The day before, Dreamworks Animation. (Netflix also announced a deal with Dreamworks Animation.) This is serious A-level content.

But you don’t have to go too far down the list of the top-sellers to find indie content of all sizes. In fact, Amazon’s self-publishing CreateSpace platform allows access to their On Demand service. I just enabled my short “Stull” for rental and download, and I’ll report back with any news.

UPDATE: I got an email saying “Stull” was accepted, but couldn’t be part of the program because it was shorter than 20 minutes. (It’s ten minutes.) Not-so-good news for my, but good news for those who have made 20+ minute shorts, often rejected by festivals as hard-to-program.

Where Is Amazon Going with This?

My sense is that Amazon views Instant Video and even the Kindle Fire as a loss leader. They want you to get the Prime subscription so you order all kinds of physical goods from them. (The original purpose of the Prime subscription was to provide free shipping.) They will make money off the cloud media content eventually, but if they do now, that’s a bonus. The importance is in locking in the consumer to an ecosystem.

Apple provided the template with music and the iTunes store. Now Amazon looks to do the same with movies, but with a Netflix-style subscription service to leapfrog the iPad advantage.

What’s funny is that just as Netflix is unbundling the physical and streaming movie businesses, Amazon is betting the farm on bundling physical goods to streaming. At $17.38/month (what I just paid for rental+streaming from Netflix this month), that comes to $208.08/yr. Even if you halve that to the price for streaming only, it still doesn’t compare favorably to the $80/yr for Prime.

Even given the difficulties of making comparisons, the tag-team battle of iPad+Netflix vs. Kindle Fire+Unbox looks pretty fair with the price handicap. While Amazon has yet to demonstrate that their streaming service is at the same level as Netflix’s, and no one is expecting the Kindle Fire to perform as slickly as the iPad, at these prices a lot of people are going to test the waters.

Will the Kindle Fire stay blazing? The first major test will be hands on reviews that take into account not just the hardware and operating system, but how it plays movies. Indies, meanwhile, should be rooting for the Kindle Fire platform. If this report from IndieWire is to be believed, Amazon’s streaming service seems to be friendlier to independent filmmakers. Keep your fingers crossed that they have enough premium studio content to lure people there, but not enough to satisfy them.

Ryan Lawler at GigaOm