Netflix Vs. Amazon: On-Demand Video Market Is Big Enough For Both

Netflix, Inc. NFLX hit a new 52-week high after hours Monday following a second-quarter sales beat. 

The streaming giant delivered Q2 sales of $2.79 billion, beating analyst estimates by $30 million. Netflix slightly missed earnings estimates, with EPS coming in at 15 cents, just a penny shy of the consensus estimate.

The company added 1.07 million subscribers domestically, with 4.14 users added Internationally. Third-quarter international net subscribers are forecasted at 3.65 million.

At time of publication, the stock was trading at $175.56, up 8.5 percent.

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With Amazon.com, Inc. AMZN and Netflix both capitalizing on the media’s shift to streaming video on demand and original content, it appears the industry is big enough for both companies to grow in segment.

Ahead of the Netflix release, Nomura analyst Anthony DiClemente noted that the global streaming video on-demand market is large enough to support both Amazon and Netflix.

With Netflix undergoing international expansion, consumers continue to show their preference for streaming exclusive content, an area that both Amazon and Netflix have shown a clear commitment to with increasing investments in original content.

Recent U.S. checks from Nomura indicate strong net addition growth, driven by easy compares and a strong content quarter. Internationally, accelerating download growth in many of the world’s largest geographies, particularly in 2014 and 2015 launch markets of Japan, China and Australia underpin strong demand.

With growing confidence in the long-term subscriber model, raised its price target on Netflix from $165 to $175 and reiterated a Buy rating.

The firm expects long-term international margins to get much higher as the platform scales and believes that Netflix maintains material strategic value ahead of a potential acquisition.

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