Amazon "Primed" To Destroy Netflix

What some thought was just a "hobby," Amazon AMZN continues to make this a full-time job. Just days after signing a deal with CBS CBS for content, it has now signed a deal with NBCUniversal that will bring Amazon's streaming library to over 9,000 TV shows and movies. This shows that Amazon is incredibly serious about going after Netflix NFLX, and Wall Street loves the move. "I think [the Amazon/NBCUniversal deal] shows that Amazon is committed to this space and may in fact see an opportunity to gain share given the anger within Netflix's own subscriber base," said Janney Capital Markets analyst Tony Wible. "The deal is a signal that they are serious about streaming, and that they will offer a competitive service in the future," said Wedbush analyst Michael Pachter. With the deal with NBCUniversal, Amazon now has more than 9,000 pieces of content that users of Amazon Prime can stream for free. Amazon Prime costs $79 per year and allows users to have free 2 day shipping. In contrast, Netflix has more than 20,000 pieces of content, but most of the content is older content. Amazon could be one major deal, perhaps with another major studio, say Time Warner TWX from really competing with Netflix. With CBS and NBCUniversal on board, this is a tremendous move for the Seattle-based Amazon. Jeff Bezos is simultaneously attacking each and every one of his competitors, from Netflix to Apple AAPL with a variety of different offerings. Reed Hastings and company know that Jeff Bezos is now seemingly intent on destroying Netflix. With more muscle behind it then Netflix, Amazon is trying to squash Netflix into oblivion. At $100 billion in market cap to Netflix's $15 billion, this should not be too hard. With the recent price hike from Netflix, Amazon can come in and undercut Netflix and be the low cost leader in a space that is seeing tremendous opportunity and capital inflows. Jeff Bezos is intent on destroying Netflix. Sounds like his competitor to the south would be proud. ACTION ITEMS:

Bullish:
Traders who believe that Amazon will continue to do well in online video might want to consider the following trades:

• Go long Amazon AMZN, as it has more resources than Netflix. This is a bullish move for the company.

• Initiate a position in Comcast CMCSA, which owns NBCUniversal.

Bearish:
Traders who believe that Amazon will over take Netflix may consider alternate positions:

• Short Netflix. The stock topped out at $300 and since come ~10% off those levels. The move to raise prices for its DVD services has a lot of consumers up in arms about the price hike.

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