Amazon has been able to acquire content for its prime instant video with a licensing agreement with A+E networks, CBS corporation, FX, PBS distribution and Scripps networks interactive. These companies are focused on creating TV series. Amazon’s success in collecting low-quality content shouldn’t faze Netflix, or its investors.
In fact, it only establishes Netflix, Inc. (NASDAQ:NFLX)’s dominance in movie streaming as it was able to sign on with Walt Disney and Time Warner. As a result, Netflix is going to have movie titles like, Thor: The Dark World, Godzilla, The Hobbit, Star wars Episode 9 and 10, 300: Rise of an Empire (can’t wait to see this one), Monster University, Tron 3, and etc. So basically, Netflix’s market position is solid if not made of titanium going forward.
Buying Netflix is like buying into the belief that Walt Disney and Time Warner Inc (NYSE:TWX) will continue to make excellent movies, which without a doubt I believe will come true. Netflix will ramp up production of its own TV series as its recent success with the House of Cards clearly proves that it isn’t as reliant on film producers as it seems.
Amazon’s international strategy is skewed
Amazon’s earnings were more or less a success. Its aggressive investment into cloud services is starting to show fruition as the online retailer is able to compete head-to-head with major players like International Business Machines Corp. (NYSE:IBM). Some 10 years ago, I doubt anyone would have thought this online retail company would ever be toe-to-toe with big blue.
The international roll-out of Amazon retail is being met with difficulty in Europe. European sales are sagging as international revenue growth was 16%, compared to North American revenue growth of 31%. The revenue growth in North America was partially driven by Amazon Web Services, which proves how much of a success Amazon may become in the cloud space.
Amazon.com, Inc. (NASDAQ:AMZN) investors are seeing hits and misses all over the place with its segment diversification. The company’s growth in the international markets is likely to continue. Amazon web services is a gigantic smash hit as it is causing International Business Machines Corp. (NYSE:IBM) to walk lopsided for a couple quarters. Perhaps Amazon’s video-streaming service at best is just another content store that’s unlikely to generate any substantial revenue, but it at least improves cross-selling activity or at least that’s what Jeff Bezos believes it does.
Conclusion
Ultimately analysts on a consensus basis believe that Amazon.com, Inc. (NASDAQ:AMZN) will be able to sustain earnings growth of 37.7% over the next five-years. With its recent success in cloud, domestic strength in online retail, along with international growth, investors should remain excited.
The article Amazon Is Overshadowing IBM originally appeared on Fool.com and is written by Alexander Cho.
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