Online retailer Amazon is testing a new monthly subscription option for its video-streaming service in a move which puts it in direct competition with Netflix and Hulu.

The $7.99 a month fee for Amazon Prime membership is available on its Web site alongside the normal $79.99 rate it charges for annual subscription.

Both Netflix and Hulu offer a similar service for $7.99, but Prime also gives members free two-day shipping on most items sold on Amazon and access to the retailer's vast eBook library.

Amazon has confirmed that it is testing the new plan but declined to provide any additional details.

"We are always looking at ways to improve the shopping experience for our customers. We are testing a monthly Prime subscription. Beyond that, we don't have anything further to offer," said the company in a statement.

Netflix was one of the first companies to offer paid-for streaming video content across the Internet. It launched in 1997 with a mail-order DVD rental model and the company today claims 23.6m subscribers in the United States and over 26m worldwide.

Hulu was founded in 2007 and focuses only on online streaming of content, mainly of US television shows.

On Monday, the Web site announced that its Hulu Plus subscribers will have access to CBS programming from January 2013 in an agreement which is expected to last several years.

The non-exclusive partnership will give its subscribers access to over 2,600 episodes of shows like "Medium," "Numb3rs," "CSI: Miami," "Star Trek," "I Love Lucy" and "The Twilight Zone."

However, Amazon has also been making moves in the sector. The company recently reached a deal with pay-television channel Epix to offer films such as 'The Hunger Games', adding to a collection of over 25,000 movies offered on demand to its Prime customers.

Netflix is still the clear leader in the online alternative TV market. But that dominance is slipping, according to a new survey from 451 Research's ChangeWave service, which suggests Amazon is taking some of its customers.

In February 2012, Netflix had 84% of the market but by September that had declined to 82%. In contrast, Amazon, which had 17% of the market in February now has over 22%.

Netflix CEO Reed Hastings recently told The Wall Street Journal that Amazon Prime was a "confusing mess", and remained confident that Netflix would continue to dominate Internet video-on-demand.