Lights, camera . . . Amazon?

The online retailer is reportedly looking to expand its video production arm. Look out, Netflix.

By Trefis Mar 14, 2012 5:59PM
Image: Hollywood (© Comstock/SuperStock)Should Amazon (AMZN) become a movie and television producer? The company already makes some small films through its Amazon Studios arm.

Now, it may be hiring people to help develop half-hour comedies. It's an interesting move and not all that unexpected as Amazon ratchets up the competition with Netflix (NFLX), which is busy producing its own original content. We wrote about this developing competition before.

Amazon already has some experience with its streaming service and has deep pockets to bolster its content. The company decided to make its streaming service a stand-alone service sometime back, and recently, it dropped some hints that it may look at developing original content. Even Intel (INTC) is starting to look at the lucrative streaming market.


Netflix US Streaming Subscribers

Offering unique and original content is how networks such as HBO and ESPN have thrived and developed into huge businesses.


Amazon has the money to spend on developing or acquiring content, and that could make things a little bit difficult for Netflix. A large portion of Netflix's estimated value depends upon how well the company does in the U.S., which in turn primarily depends upon the growth in streaming subscribers. New features from Amazon and others could potentially put the brakes on this growth for Netflix.


This also sparks an interesting question: What proportion of the total online viewing will the original content eventually represent?


Online-streaming companies will have to strike a careful balance. A small amount of original content may not be enough to lure incremental subscribers, thereby leading to unnecessary spending. High amounts of original content may put these companies in direct competition with pay-TV service providers that have traditionally made the original programming available through pay-TV packages.


Our price estimate for Netflix stands at $133, implying a premium of 25% to the market price.

13Comments
Mar 14, 2012 7:45PM
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I'm sticking with Netflix!!! Been with them awhile now, i see no reason to change. At any rate, it will take Amazon a little time to catch up. I will just wait and see?
Mar 15, 2012 12:15PM
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No they shouldn't!! They need to focus on their content and making their Amazon Premier more of what consumers are looking for in streaming. This would help them to overtake NetFlix, not getting in to a costly venture such as making their own stuff. This is what is wrong with NetFlix; they are so concerned with trying to become another network that they are loosing sight in what got them where they are.
Mar 15, 2012 11:39AM
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I luv Netflix but I also use Amazon to stream new movies paying for each movie watched. I am an Amazon Prime member too but  find the interface for finding movies in the free streaming section sub-par to netflix and quite frankly I've yet to find anything I'd be interested in that I can't find from Netflix. Looks like for now I'll be using both , Netflix for streaming day to day stuff and Amazon to stream new release movies
Mar 15, 2012 12:12PM
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I like Amazon.com a lot. I use it for all movie rentals and for purchasing some Network TV shows the day after they air. I also prefer to buy anything I need and get the free 2 day shipping with my Prime account. However, I think their Prime Instant Video section sucks. I don't know if they have a good selection, but the layout and presentation sucks. They have a long way to go to make finding movies a pleasant experience. They'd be smart to just copy Netflix in their presentation. I mean come on, you pick a category and then are presented with a paged single column list with no ability to change how many items to show on the page or whether to view them in a grid instead of a list. I really hope they improve this soon.
Mar 15, 2012 1:55PM
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I subscribe to both Netflix (streaming video only) and AmazonPrime. I like Netflix better. Everything I watch on Netflix is included in my monthly payment. Not so on AmazonPrime. I pay about the same for both services but a huge number of the offerings on AmazonPrime are NOT free. You have to pay to 'rent' them or you can choose to buy them. And while AmazonPrime may have a larger selection than Netflix if I'm paying a monthly charge I don't think I should have to pay a 'rental' fee in addition.
Mar 15, 2012 12:39PM
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I have been a Netflix user for years and Amazon does not begin to match Netflix's streaming quality or content.  Oh and I am hearing impaired so I need the closed caption feature.  When I enquired to Amazon if they would provide this their reply was "No plans to stream captioning" so I am guessing they will not be popular with those of us who are hearing impaired.
Mar 15, 2012 2:14PM
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Amazon Prime video on demand, or VOD doesn't support many Samsung devices. I contacted Amazon about this lack of a Samsung app and they just don't seem to care. Samsung is a big TV and DVD blue ray player manufacturer and they don't have a Amazon Prime VOD app.  For that reason I won't pay for their service period. I' not going to buy another streaming device to use Amazon Prime VOD.

Netflix has a app for just about everything video streaming capable blue ray DVD player  I can think of, so that makes them a better choice for me.

Mar 15, 2012 11:33AM
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I love graphs like this one. It doesn't mean a thing except at a marketing meetings when the bonuses are passed out.

 

Seriously, I am really struggling with Netflix streaming. I have had it for a couple of years now, and there is very, very, little on there. It seems to be mainly B movies at the best, and a fair selection of C's and D's. Zombie-Croc v's Shark-Zilla type garbage with the lead role played by the brother of the guy who was the bus driver in Forrest Gump.

 

I would cancel it except my little girl likes to watch cartoons...

Mar 15, 2012 3:49PM
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I currently stream Netfix & Hulu Plus through my Roku box. I've had NF for about 3 years, and Hulu Plus for about a month just to watch Miami Vice re-runs. I REALLY dislike Hulu Plus's interface (log in sequence) compared to NF. NF is much more "user friendly", but the biggest thing is that NF DOES NOT have commercials, which HP does, and at the most inopportune times. After I get through watching all the MV episodes, I will switch back to NF's DVD rental W/ streaming like I used to have. Hope this helps someone. By the way, the prices are about equal, just NO commercials on NF.
Mar 15, 2012 2:38PM
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We have Netflix Streaming, Boxee Box & Ooma (free phone) which all work nicely together.  All of our $75 Blu-ray players stream Netflix from any room in the house & we have a good attic antenna for local HD.  I have not subscribed to Hulu Plus, so to watch anything decent we have to dig deep into the repository directories of Boxee to find what we want.  Although there are more menus to click through than on a typical DVR, most everything we watch can be found within a minute.

 

One wish is that our Wii or Boxee Box could serve as a DVR by connecting a USB drive.  This would be simple to add but is held-back by legal issues...  Boxee Box just came-out with a USB tuner but it is useless unless Boxee can serve as a DVR - we can just keep using our TV's tuner...  For instance, right now I cannot record sports or NASCAR.  With TIVO, I could do some lawn work and start watching the game about an hour into it.  By the time the game ended, I was caught-up.  Therefore I do miss the simplicity of my TIVO (1st DVR) but do NOT miss our $130 monthly cable/Internet/phone bill.

Mar 15, 2012 4:30PM
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Hulu Plus is wonderful for all kinds of current season shows from NBC ABC FOX CW and more and most shows are able to view the next day after they air ! I do not have any sat or cable or antenna just netflix and hulu plus and i dont feel like im missing anything and probably see more current tv shows with hulu plus than i could ever watch on a cable system . i watch what i want when i want not just what the cable company puts on for me . I dont see how you can complain about commercials when u are paying 8 bucks a month for the same shows you get on sat or cable with three times as many commercials ! My sat bill when i cancelled it was $70 a month ! and it was nothing but commercials ! Hulu plus has so much to offer ! what a waste to only use it for miami vice reruns  ! Fuzzy Fan you certainly are not using it to its full potential !
Mar 15, 2012 3:14PM
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Just reading comments and just wanted to clear up something. Amazon Prime itself does not offer rentals. If you use just the Amazon Prime portion of the instant videos section you will be shown all available free offerings for your account. Amazon Instant Video is their rental service and if you take the second to read what is on the screen you would see that there is a big difference in how they present them to you. 

You should pay attention to what you are clicking on. Words mean something. Words together mean even more. Not everything can/should be a picture.

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