Amazon is adding hundreds of movies and TV episodes to its Prime Instant Video service, following a licensing deal with Metro-Goldwyn-Mayer Studios. The agreement further turns up the competitive heat between Amazon, Netflix and other competitive rivals.

That means subscribers can stream movies like Moonstruck, Rain Man, Terminator and Dances with Wolves, instantly and at no cost above their $79 annual fee, on a wide variety of devices that includes Xbox 360 and PlayStation 3.  Fans could even select to watch The Silence of the Lambs next time they, um, have an old friend for dinner.

This agreement follows Amazon’s announcement yesterday that its Amazon Cloud Player App for iPhone and iPod touch is now available on the App Store. The app allows customers to stream or download music stored in Cloud Player, play music already on their device, and manage or create playlists.

“Our customers tell us they love having tons of movies and TV shows to choose from, which is why we are focused on adding even more titles to our already extensive Prime Instant Video library,” said Brad Beale, director of digital video content acquisition for Amazon.

Related links:

Amazon – MGM press release

Amazon – cloud player press release

Metro-Goldwyn-Mayer Studios – official site