Amazon, Netflix in Battle Over Instant Stream Supremacy
When Netflix launched an instant streaming service for its movies and TV shows at the start of 2007, it was a minor perk for the company’s subscribers who were used to getting DVDs in the mail. Fast forward half a decade and Netflix streaming subscribers outnumber DVD subscribers by more than 11 million, and they make up about one-fourth of all Internet traffic in North America. The explosion in popularity of online streaming has simultaneously led to higher revenues and greater troubles for Netflix, as movie studios demand more expensive contracts and bigger companies begin to throw their weight around in the sector.
One such company is Amazon, which last year launched a streaming service of its own. Starting as a small feature of an Amazon Prime membership—which also provides free shipping and free Kindle ebook rentals for $79 per year—Amazon Prime Instant Video has expanded from 5,000 TV and movie streaming options at its launch to about 22,000 titles today. This week the company announced it was adding 3,000 movies that were previously exclusive to Netflix through a deal with pay-TV channel Epix. Expect to see titles like “Iron Man 2,” “True Grit” and “Transformers: Dark of the Moon” soon on Amazon’s service.
The loss of exclusivity is hardly a dagger in Netflix’s heart—the company will keep the movies too, and its library still dwarfs Amazon’s. But the online retailer’s end-game here is likely not to exceed Netflix in scope and quality, but to provide just enough features to make a Prime membership, which is $15 cheaper than a Netflix subscription annually, appealing to customers. “Not only does [instant streaming] give you an additional reason to keep subscribing, but it gives you an additional reason to stay within the Amazon environment,” says Dan Cryan, the research director for digital media at IHS Screen Digest. “You’re potentially going to turn around and buy more stuff.”