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As an Xbox Live Gold member and Amazon Prime subscriber, the release of Amazon Instant Video for Xbox Live yesterday was pretty much made for people like me. For no extra charge (beyond the ~$140/year we already pay for both services), we get access to a library of 17,000 movies and TV shows on my television set.

Following the release of a similar app for Sony’s PlayStation 3, the arrival on Xbox Live is a key step in Amazon’s effort to become a bigger player in online video. For me, the test will be whether or not it convinces my family to drop our Netflix streaming subscription, and I suspect others will be considering a similar decision.

So I made a point last night to fire up my Xbox 360, download the new Amazon app, and try it out. To be clear, one evening with a service does not translate into a comprehensive review, but I wanted to share my initial impressions here, to give new users a sense for what to expect, and compare notes with others who have been trying it, too.

Interface: It’s simple and intuitive, particularly for people who have been using Microsoft’s Xbox Live interface since the overhaul last fall. The overhead navigation bar can be navigated with the traditional Xbox controller or Kinect gestures. No surprises here. They kept it simple, with clear cues to identify the no-extra-charge videos available to Prime subscribers. Thumbs up.

Streaming: A few seconds in to our first episode of Sesame Street, we got a buffering message as the video reloaded. Really? Sure, it was probably my connection, but I far prefer the approach that moderately degrades the quality of the video, rather than interrupting the stream entirely. Curious to hear what others have experienced so far. Thumbs down.

More like this: Not a new technology, by any means, but one that Amazon does particularly well, and the quality of the company’s recommendation algorithms were apparent in the suggestions I saw. After watching a bit of “Page One,” the documentary about the New York Times, I was immediately sucked in to a documentary about Steve Jobs that I had forgotten I wanted to watch. Thumbs up.

Search: Microsoft’s Kinect sensor enables quick voice search for content, but many people still end up using the Xbox 360 controller to search character-by-character, a slow process, to say the least. Amazon’s app helps these people out by saving searches conducted in each session, making it possible to click a tile to quickly search again or modify a query. If only the searches were preserved after exiting and returning to the app, it would be awesome. Thumbs sorta up.

Bookmarking: This morning I wanted to go back to the Xbox to pick up where I left off in the Page One documentary, and I ended up having to sift through the entire catalog of documentaries to find it again. The Amazon app hadn’t automatically saved my recently watched videos, at least not that I was able to find. The movie did pick up where I left off, thankfully. Upon further investigation, it turns out that I needed to save the movie to my “Watchlist” for quick access. Makes sense, but would it hurt them to automatically save my recently watched videos, as well? Thumbs down.

Purchasing and rental:  Even though Amazon Prime subscribers can quickly access a large library of content at no extra charge, the full library of Amazon movies and TV shows is many times bigger, and plenty of people don’t subscribe to Amazon Prime. However, it’s not possible to rent or buy videos from Amazon inside the Xbox Live app. Instead, Amazon requires users to make the purchases separately on a tablet or computer. They’re then available inside the Amazon app on Xbox Live. This probably has something to do with not wanting to split the revenues with Microsoft, or not wanting to work with the Redmond company’s e-commerce system, but seriously, this type of thing is absurd in this day and age. Thumbs down.

Those are my initial impressions. Even though I ended up with more thumbs down than up, I’m happy that Amazon and Microsoft finally brought this service to the Xbox 360. Nitpicking aside, that’s deserving of a big thumbs up.

Ultimately, the quality of the catalog will determine whether we can give up the Netflix subscription. Does it have the shows we want to see? Does it help us find good stuff we didn’t know about?That’s the type of thing that becomes clear over time. I’ll keep you posted.

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