Amazon Prime may be the next big thing
If there is somebody who knows about permanent innovation and expansion, that’s Amazon.com, Inc. (NASDAQ:AMZN). From books to server farms (Amazon Web Services), and now from server farms to video streaming and beyond. Amazon Prime is the product designed to compete against Netflix for video demand: Prime members enjoy free two days shipping on millions of items with their purchase, unlimited instant streaming of thousands of movies and TV shows, and a Kindle book to borrow for free each month. Once more, Amazon.com, Inc. (NASDAQ:AMZN) is using the resources from other successful products to market a new one.
Amazon.com, Inc. (NASDAQ:AMZN) is also well aware of the importance that content abundance has in this market. But it is not paying too much for it. The company knows its limits. In two years and a half, the company multiplied by 20 the number of videos and materials available for Prime users. Finally, Amazon.com, Inc. (NASDAQ:AMZN) Prime is cheaper: the $79 annual Prime membership fee is $17 less than the $96 Netflix members spend for streaming (per year).
Comcast Corporation (NASDAQ:CMCSA) : It’s never late to join the party
Comcast Corporation (NASDAQ:CMCSA) is not a video streaming company. It is a global media and tech company with a strong cable TV revenue component: around 35% of Comcast Corporation (NASDAQ:CMCSA)’s value. But as customers shift to video on demand and satellite companies, Comcast realized it had to change its business if it wanted to survive the next five years. As a result, the company started diversifying business segments, including broadcast television, cable networks, and even theme parks.
Acquiring media corporation NBC Universal last year gave Comcast Corporation (NASDAQ:CMCSA) more exposure to the broadcast network business, international cable networks, and operations of Universal Pictures in the production, acquisition, and distribution of films globally. In other words, Comcast Corporation (NASDAQ:CMCSA) owns top quality content and has excellent contacts and relations with broadcast networks.
Therefore, it made a lot of sense for Comcast to launch Xfinity TV, its own video streaming service. That being said, the product sells TV series , while Netflix is more about movies. Also, because Comcast’s cash cow is the cable business, the more progress Netflix and Amazon Prime make, the worse for Comcast’s cable business, as cable and video on demand through Internet are becoming substitutes for most users. The acquisition of NBCU adds exposure to this threat.
The bottom line
In this article, I analyzed three examples of companies fighting for market share in the promising video streaming market: an early mover (Netflix), an internet company with enough resources to make its product more competitive and attractive (Amazon), and a big global media corporation trying to join the party late and make its traditional services more protected against video on demand. There are, naturally, many more competitors, like Hulu, but I think the group I chose represents well the categories of players in this market.
