As more and more people are cutting the cord when it comes to home entertainment, competition in the industry has never been more intense. Broadcast gave way to cable before satellite became an option, and now technology is driving the fight and offering an increasing number of choices. Four identifiable segments are beginning to emerge: cable and satellite, streaming video, TV enhancement, and advanced options.
In Part 1 of this series, I examined the traditional players — including cable and satellite providers, as well as communications companies that have begun to get into the game. Today, I’ll examine the various streaming video options. There is some overlap in certain cases, but by understanding each segment individually, you’ll get a clearer picture of the overall industry.
The streaming video players
Netflix, Inc. (NASDAQ:NFLX): As the first mover in streaming video, Netflix has a clear advantage over its competitors. Netflix, Inc. (NASDAQ:NFLX) stock has taken investors on a roller-coaster ride over the past few years. In 2011, shares were trading just below $300 when the company announced the massive price increase and the bifurcation of the DVD business. Netflix, Inc. (NASDAQ:NFLX) stock became a case study in how to kill the golden goose, seeing the stock drop to just over $60 last fall. The stock is now knocking on $250 again.
As a first mover, Netflix, Inc. (NASDAQ:NFLX) has the ability to not only continue build a significant subscriber base but also to forge critical strategic partnerships and iron out glitches. Recently, Netflix, Inc. (NASDAQ:NFLX) announced user profiles that will allow as many as five users per account to customize recommendations and preferences. The company is working toward constantly improving the user experience.
What CEO Reed Hastings is really doing right, and another reason Netflix, Inc. (NASDAQ:NFLX) is strongly positioned among streaming video competitors, is producing original content. In the entertainment business, content is king. While some critics have observed that Netflix has had mixed success with its original shows, it’s moving in the right direction. Furthermore, the move by Hastings indicates that the CEO understands the importance of content in the long-term success of streaming video.
Amazon.com, Inc. (NASDAQ:AMZN): Amazon Prime is currently the most significant competitor to Netflix in the streaming space, and this year saw the fight intensify. Not only did Amazon.com, Inc. (NASDAQ:AMZN) aggressively go after some of the licensing deals that had once belonged to Netflix — remember, Amazon.com, Inc. (NASDAQ:AMZN) has a significantly larger balance sheet to play with — but it has also ramped up its own original production effort. Amazon.com, Inc. (NASDAQ:AMZN) recently announced that it’s putting six more pilots into production, most with a focus on kids’ programming — including a pilot aimed at 6- to 11-year-olds and a first-ever live action show.