Apple Inc. AAPL is teaming up with Amazon.com, Inc. AMZN to offer Prime Instant Video through Apple TV, a move Gene Munster considers "more of a negative for Netflix than a positive for Apple or Amazon."
Netflix, Inc. NFLX is already accessible through Apple TV while Prime Instant Video is only screenable via AirPlay. Amazon’s inclusion on the hardware would thus enable convenient viewing while also extending the rival’s reach.
Threat Assessment
Prime recently emerged as a formidable streaming competitor with its Oscar-winning original content and licensing of “Thursday Night Football.”
“We think that Amazon's heightened focus on content spending, particularly for Originals, is a shot across Netflix's bow, as is its recent international expansion,” Wedbush analyst Michael Pachter wrote in December.
Even Netflix CEO Reed Hastings conceded the threat is “awfully scary.”
What’s The Diff?
Content-wise, the two are fairly comparable. With little overlap in their licensed content, their original productions, each of which boast Academy Awards, span diverse genres and feature respected talent. Netflix’s “House of Cards” and “Unbreakable Kimmy Schmidt” meet Prime’s “The Man in the High Castle” and “Mozart in the Jungle.”
The web-browser and mobile-app interfaces are also similar, with neither bogged by ads and both enabling genre sorting, list composition, ratings and intelligent adjustment of recommendations.
The Prime subscription costs $99 annually with download capabilities and opportunity for in-service rentals and purchases. Meanwhile, Netflix’s subscription costs between $8 and $12 per month depending on how many devices can concurrently access it, and users can download select titles on iOS and Android technology.
By performance metrics, though, competition really isn’t that close.
As of April, eMarketer projected Netflix to host 128 million users this year as Amazon entertains 85.3 million, representing U.S. market shares of 66 percent and 44 percent, respectively. By 2020, Netflix is expected to lead with 139 million as Amazon boasts 96.5 million.
A Veritable Opponent?
But some argue the rivalry doesn’t exist at all. In fact, the services are fairly complementary, according to Morgan Stanley surveys. About 45 percent of Netflix subscribers also use Prime, while 60 percent of Amazon members also use Netflix.
Netflix shareholders don’t seem to share Munster’s sentiment, as the stock was unfazed by Monday’s announcement.
Related Links:
Mark Cuban’s 2 Biggest Holdings: Amazon And Netflix
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
|---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
