However, while Amazon.com, Inc. (NASDAQ:AMZN) is increasing the quantity of content available for Prime subscribers, it is also improving its quality. Last year, Amazon won the exclusive streaming rights for TNT’s The Closer, one of the most successful series in the history of cable TV. In February, Amazon announced that it had won the exclusive domestic streaming rights for the PBS hit Downton Abbey, beating out Netflix, Inc. (NASDAQ:NFLX) in the process. Amazon’s financial muscle could allow it to win more than its fair share of such deals going forward.
What it means
Netflix may still have a small edge over Amazon in terms of content quality, but the gap is rapidly shrinking. If Amazon puts a big marketing push behind Prime Instant Video and its new content, some Netflix users will be tempted to switch, particularly as the Netflix content library gets pared down.
Moreover, Amazon only charges $79 per year for Prime (or $39 per year for students), which includes other benefits such as free two-day shipping on most purchases and access to the Kindle lending library. Netflix is already priced slightly higher at approximately $96 per year. The competition from Amazon will discourage Netflix from raising prices for the foreseeable future.
Netflix has rebounded impressively from the Qwikster debacle of 2011. However, the company’s new focus on “curated” exclusive content rather than broad licensing deals could alienate some subscribers when certain movies and TV shows disappear from the service. With Amazon quickly becoming a viable alternative, the risks for Netflix are greater than ever.
The article Will Amazon Prime’s Video Content Library Overtake Netflix’s? originally appeared on Fool.com is written by Adam Levine-Weinberg.
Fool contributor Adam Levine-Weinberg is short shares of Netflix and Amazon.com. The Motley Fool recommends Amazon.com and Netflix. The Motley Fool owns shares of Amazon.com and Netflix.
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