Skip to main content
Advertising

Originally published February 22, 2011 at 11:08 AM | Page modified February 2, 2012 at 12:30 PM

  • Share:
             
  • Comments (15)
  • Print

Now playing: Amazon.com vs. Netflix

Amazon.com introduced a Netflix-style online video-streaming service Tuesday, promoting 5,000 movies and TV shows as part of its $79-a-year Amazon Prime program.

Seattle Times business reporter

Most Popular Comments
Hide / Show comments
NewsReader...I totally agree. I don't understand the people who do the "streaming... MORE
If Netflix stopped shipping DVDs in the mail, I would cancel my membership with them as... MORE
I'm a Business editor at The Times. Here's a link to reader comments from an earlier... MORE

advertising

Amazon.com introduced a Netflix-style online video-streaming service Tuesday, promoting 5,000 movies and TV shows as part of its $79-a-year Amazon Prime program.

Besides free two-day shipping and cheap overnight deliveries, Amazon Prime members now can catch "Syriana" or "Chariots of Fire" for no additional charge.

But it remains to be seen if Seattle-based Amazon's new all-you-can-eat offering will give it an edge against Netflix, the nation's No. 1 video-streaming service. Amazon already rents and sells digital versions of movies and TV shows on an a la carte basis.

Netflix, of Los Gatos, Calif., comes to the battle armed with more than 20 million subscribers in the United States and Canada. While the company does not say how many titles it has available for streaming, the number is believed to be four times as big as Amazon's.

"The bottom line is that this offering from Amazon will not likely cause much of an exodus from Netflix in the beginning," Ben Schachter, an analyst at Macquarie Capital, said in a note to investors. Of the 100 most popular movies on Netflix, only one, "Syriana," is available for free streaming to Amazon Prime members, Schachter said.

For $7.99 a month (or $95.88 a year), Netflix subscribers can stream movies and TV shows to their computers, smartphones, tablets and Internet-connected TVs. For an additional $2 a month, Netflix throws in one by-mail DVD at a time.

Amazon's pay-as-you-go service, with 90,000 movies and TV shows, offers a broader array of titles than the new Prime add-on. But it's still early in the game, said Cameron Janes, director of Amazon Instant Video.

"We're going to grow the catalog and continue to improve the offering," Janes said.

Most of the major studio titles offered for free to Prime members are five to seven years old, such as Warner Bros.' "March of the Penguins," while titles from independent studios, including Music Box Films' "The Girl With the Dragon Tattoo" trilogy, are more current, Janes said.

He described the TV content as a "really, really broad mix," from a 2009 PBS documentary on U.S. national parks to old episodes of the "Rocky and Bullwinkle Show."

Amazon Prime member Karinna Ball, 47, of Walla Walla, said the new offering reinforces a decision she already made to renew her nearly year-old membership.

"I don't think I'll cancel my Netflix subscription, but it's kind of nice to have another option," she said.

Amazon made a profit last year of $1.15 billion on sales of $34.2 billion, a 40 percent increase from 2009.

Amazon Prime, introduced in 2005, is widely credited with fueling the company's rapid sales growth because customers typically increase their purchases after prepaying for delivery, hoping to get the most out of their $79 annual membership fee.

Some see Amazon's new video-streaming service as a natural next step for the Internet giant, which upended the book business in 2007 when it introduced its Kindle e-reader. Recently, Amazon bought LoveFilm, a Netflix-esque European DVD-rental service that also has a streaming component.

Building a dominant online video subscription service requires deep pockets. Netflix spent $174 million to secure new video-streaming rights in the fourth quarter, a nearly eightfold increase from a year ago.

"While Amazon's initial video library is inferior to Netflix's digital catalog, we believe Amazon's library will continue to grow, especially considering its roughly $9 billion in cash," William Blair analyst Ralph Schackart said in a note to investors.

Wedbush Morgan analyst Michael Pachter, who says Netflix has about 20,000 titles available for streaming, emphasized that Amazon is only getting started in the subscription streaming business.

"I don't think Amazon is done, and I think this is just a test to see demand patterns and resolve technical issues," Pachter wrote in an e-mail.

"I fully expect a full-fledged streaming-only or streaming-plus-DVD" offering in partnership with Redbox to be rolled out in the next several months, he said.

Redbox, a unit of Bellevue-based Coinstar, told analysts last week in San Francisco it's close to finding an online partner to bundle physical disc rentals with an unlimited streaming offer. A typical Redbox machine holds about 600 DVDs representing up to 200 titles, so a streaming service would enable it to offer a wider array of Hollywood releases, especially older classics, President Mitch Lowe said.

Lowe did not divulge the names of potential partners, and Amazon's Janes declined to comment, citing a long-standing corporate policy against publicly discussing rumors.

Shares of Netflix closed Tuesday down $13.91, or 5.9 percent, to $221.60. Amazon's stock fell $6.08, or 3.3 percent, to $180.42.

Information from Bloomberg News is included.

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com

News where, when and how you want it

Email Icon


Advertising