The service works much like Netflix's instant streaming. You pay a subscription to watch any of the videos available for instant viewing. You can watch these videos on your computer. It also works with some set-top boxes like the Logitech Revue and Roku XDS.
Of course, Amazon isn't marketing this as a standalone service. Instead, it's an added perk for Amazon Prime members. Prime members pay $80 yearly for unlimited two-day shipping. It's a way for frequent shoppers to save some cash on faster shipping.
So the 4 million plus Amazon Prime members already have the new video service. They don't have to pay anything extra for it.
If you don't feel like paying for a Prime membership, there's a pay-per-view option. You can choose to rent or purchase the movie. The cost of this varies depending on the movie. It's usually $4 to rent and $10 to buy.