Netflix, Inc. (NFLX), Outerwall Inc (OUTR), Amazon.com, Inc. (AMZN): Where Will This Rollercoaster Go Next?

Amazon.com, Inc. (NASDAQ:AMZN) Prime Instant Video represents a much more serious threat to Netflix, Inc. (NASDAQ:NFLX)’s business. Amazon recently announced that its Prime Instant Video library had surpassed 40,000 titles. It remains to be seen whether the company will reshape the interface for its service and make a more aggressive play for Netflix’s market, or if the company is content to sell Prime Instant as an added perk that comes with free two-day shipping. If Amazon were to give Prime Instant the slick veneer and ease of interface that Netflix offers, it could carve a much larger portion of the streaming market.

That said, you won’t find many of Netflix, Inc. (NASDAQ:NFLX)’s most threatening competitors on the stock index. The ease of piracy and the propagation of free streaming sites stand to diminish many of the gains that Netflix would like to make with its forays into original content.

Arrested Development was pirated over 175,000 times in the 48 hours following its release, even with Netflix, Inc. (NASDAQ:NFLX)’s decidedly low barrier to entry. While this number pales in comparison to the piracy figures for Game of Thrones, it represents a very real problem for Netflix. The company will see increased competition in the streaming video space and risks bleeding subscribers if it cannot produce breakthrough content. These factors in conjunction with the looming possibility of another Qwikster-style mismanagement lead me to believe that the company is presently overvalued.

Keith Noonan has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Netflix. The Motley Fool owns shares of Amazon.com and Netflix.