Amazon stepped up Tuesday to introduce a new streaming service it hopes will compete with Netflix and other online video ventures. But in the ongoing battle to dominate the digital entertainment biz, Netflix made the latest move to stay ahead of its rivals by locking a two-year deal to offer a range of older TV shows from CBS’ vault, from “Twin Peaks” to “The Twilight Zone.”

The news from Amazon and Netflix are the latest moves reflecting the current state of digital distribution in Hollywood and the growth of online players that studios must keep a handle on — as one company introduces technology, another is figuring out how to make it attractive to consumers with programming.

Studios want to make sure they benefit with the best deals, since these new digital businesses will grow by generating revenue from the content Hollywood has created. In fact, online rentals are expected to grow 120% to around $342 million in 2013, up from $155 million last year. Digital sales will grow 44% from $231 million in 2010 to $331 million in 2013, iSuppli’s Screen Digest said.

Weeks after Amazon’s plans to launch a streaming service leaked online, the e-tailing giant finally offered the option to its Amazon Prime members, who pay $79 a year for shipping discounts.

“Millions of Amazon Prime members already enjoy the con-

venience of free two-day shipping,” said Robbie Schwietzer, VP of Amazon Prime. “Adding unlimited instant access to thousands of movies and TV shows at no additional cost is a great way to give members even more value for their membership.”

Members will be able to access more than 5,000 movies and TV shows and stream them to computers and Internet-connected TVs, Blu-ray players and set-top boxes that offer Amazon Instant Video.

Videos available include “The Girl With the Dragon Tattoo” trilogy, “Amadeus,” “Syriana” and “Chariots of Fire”; docus “Food Inc.,” “March of the Penguins” and “Ken Burns’ National Parks”; plus TV shows “Doctor Who,” “Farscape,” “Fawlty Towers,” “Arthur,” “Caillou,” “Super Why!” and “Mister Rogers’ Neighborhood.”

Amazon has already been selling and renting digital downloads of movies but only on a per-title basis through Amazon Instant Video.

Its expanded move into the streaming biz had already been hinted at with its January decision to acquire British streaming and DVD rental service LoveFilm (which has 1.6 million customers). Amazon also accidentally leaked streaming plans to Amazon Prime customers in an ad earlier this month (Daily Variety, Feb. 2).

Amazon’s move will clearly create another rival to Netflix, which already has been fending off similar streaming offerings from Walmart’s Vudu, Best Buy’s CinemaNow, Blockbuster’s On Demand and video-on-demand rentals from the major cable and satellite providers. Redbox is also prepping to roll out its own digital service to go along with its $1-a-day kiosk biz.

Most of the 90,000 movies and TV shows offered as rentals or purchases via Amazon Instant Video are not available as streams. Movies rent for around $4 and sell for $15.

But as Amazon negotiates more streaming deals, it can now promote its Instant Video service to Amazon Prime customers.

Either way, Amazon Prime’s $79-a-year price (at $6.58 a month) is cheaper than Netflix’s $7.99 a month digital streaming membership that adds up to $95.88 a year.

Still, Amazon now needs the content to compete with the more than 20,000 titles Netflix offers as streams. The company has been talking to studios to increase its library of digital pics, but none of the majors have agreed to a distribution deal with Amazon just yet.

Those talks are occurring as Netflix adds more programming to its digital library, with the CBS pact following similar deals with ABC and Disney for reruns and pacts with Relativity and Epix for movies.

Deal with Netflix reps the first time streaming pact between CBS and the fast-growing Internet vid provider. Pact also makes it the last of the four major broadcasters to make its shows available on the company’s premium subscription service. CBS does not have any licensing agreements with Netflix’s primary competitor in the streaming space, Hulu.

The nonexclusive pact covers all seasons of shows including “Frasier” and “Cheers” as well as episodes from chestnuts such as “The Andy Griffith Show,” “Star Trek” and “The Twilight Zone.”

Programs will be available through Netflix’s standard $7.99 per month streaming service.

CBS has been more restrictive than its Big Four counterparts about allowing Web access to many of its shows. It’s also been clear about holding out for significant license fees from online distribution partners.

“This deal recognizes the increasing value of our content in today’s marketplace,” said Scott Koondel, prexy of distribution for CBS Television Distribution.