OnLive, Amazon set their sites on Netflix

Those pundits who have been focusing on the threat OnLive, a video game streaming service, poses to the traditional video game industry might want to expand their focus a little.

The company now says it plans to expand into subscription video streaming in 2011. And Amazon could be right behind it.

The Wall Street Journal reports both companies are working on services that would compete directly with Netflix’s growing “all you can eat” streaming service.

OnLive is the smaller player, of course, boasting a miniscule installed base of customers. But the company has been gathering buzz for its video game streaming quality. Should it include video releases to its options, it would offer a pair of services that appeal to the same demographics.

Amazon is the larger threat, naturally. The WSJ says that company’s streaming service could tie in with its Amazon Prime service – and would stream both TV shows and movies. (This is as opposed to the Video on Demand product the company already offers.)

Netflix has come under increasing fire as its streaming service has grown. Earlier today, Time Warner CEO Jeff Bewkes said the company does not have the financial muscle to compete with existing distribution models and called its offer of $100,000 per episode for new TV shows airing this fall ”measly” and “little".