Amazon and Netflix Wage War


In the battle of streaming content providers, Amazon Instant Video and Netflix are the main heavyweights and the two are getting ready to meet in the middle of the ring. Netflix is the stalwart reigning champion, but the new kid on the block has a strong background in other leagues and is looking to make noise in their new weight class. This week major developments took place between the two streaming tycoons so this is nothing but good news for consumers. Neflix waged their future by teaming up with cable, striking a deal with three cable companies that will now offer their services and Amazon Instant Video teamed up with HBO to really get the war between the two heating up.

Netflix announced last week that they would be increasing their monthly fees in the coming months, first for new customers then for existing ones. This is because they signed a venture with RCN, Atlantic Broadband and Grande Communications. All these companies will now offer Netflix’s services through their cable boxes. This is a big move for the streaming provider as those who wanted to access their service had to either have a DVD/Blue-Ray player that connected to the Internet, a smart-TV or a Chrome-cast (or similar device). Now those less tech-savvy people will be able to access Netflix, assuming they have an account, with only a standard TiVo cable box. Netflix is positioning itself to become like HBO or ShowTime.

This move sends an interesting message because for years it was assumed that it was cable vs streaming. What Netflix is essentially doing is using cable to their advantage and becoming what they have always wanted to be; a premium cable network. They basically already have different channels as they sort all their titles into categories for users to browse. This is similar to HBO, HBO Comedy, HBO Drama, etc. So by giving access to those who think that streaming as too advanced, they are able to pick up valuable customers who may have not thought about using their services before now. The cable providers Netflix have teamed up with are small, servicing under 700,000 customers, but it is a poignant move for the streaming giant in their waging war with Amazon Instant Video.

However in trying to absorb that blow and immediately firing back, the new contender also made moves of its own this week in order to up the ante between the two. HBO struck a $300 million deal that would allow Instant Video customers to stream popular HBO shows like The Wire and The Sopranos. This is a big win as HBO has been bullish in regards to licensing their original programs to any outside company. ShowTime had been practicing this act for a while by allowing Netflix to stream their popular shows like Dexter and Weeds and so HBO decided to go ahead. Before the deal went down the only way to watch these old HBO series was through HBO GO or to physically buy the DVD/Blue-Rays. Netflix has the upper hand in regards to original content as shows like House of Cards and Orange is the New Black. These shows have done very well for them and Amazon has had little success in this arena so far.

Still, this move gives customers the choice between the two reason to think as there are pros and cons for both. Netflix is going after everyday consumers who may not feel ready to get into the streaming services business and Amazon is essentially going after Netflix customers who want a streaming service that provides quality programming, which HBO’s additions are. The streaming services war is just beginning and it is too early to know who will end up on top. It might easily be HBO as they are the far and away most ready network to enter the online-only marketplace. AT&T has also partnered with the Chernin Group and are planning on entering the streaming war as well some time in the future.  Also many cable networks are developing instant apps that resemble the look of Netflix. The lines are still being drawn, but for now the two heavyweights are Netflix and Amazon Instant Video, and they have just waged the first battle in the streaming services war.

Commentary by Chris Dragicevich

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Marketplace Business

The New York Times


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