It does work on the Roku, though I've not used it as we currently get Prime for free through Amazon Mom and therefore are not entitled to this new feature.

I don't think Amazon are trying to go head to head with Netflix, rather they are trying to increase awareness of there video offerings, but more so to increase the number of Prime subscribers.

We're down to just having basic cable $15, and I'm planning on going OTA to replace that come spring. Netflix Instant Streaming $9.99, Hulu Plus $8, the odd Amazon VOD, and some Roku channels eg Nowhere TV in particular. This is compared with spending ~$70 on DirecTV and $16 on Netflix this time last year.

We're currently trying out Sezmi as a OTA DVR, but so far it has not met minimum WAF levels.