Netflix, Inc. (NASDAQ:NFLX) is working quickly to differentiate itself on the content front. One area in which it’s locking up a leading position is kids’ television. Competitors like Amazon.com, Inc. (NASDAQ:AMZN)’s Prime service are going to find it increasingly hard to compete.
Video Streaming or Television?
The line between video streaming and television is quickly blurring. The difference was quite distinct before Netflix, Inc. (NASDAQ:NFLX) made the switch from focusing on mail delivery of DVDs to streaming movies online. Just a few short years later, however, the company is clearly looking to be an Internet Television station.
The big turning point came when Netflix, Inc. (NASDAQ:NFLX) moved into content creation, with shows like Lilyhammer and House of Cards. Amazon.com, Inc. (NASDAQ:AMZN) quickly followed suit, with plans for its own unique content. But a few self-created shows weren’t enough to differentiate Netflix, Inc. (NASDAQ:NFLX), or Amazon.com, Inc. (NASDAQ:AMZN), as a television station.
Exclusives
Netflix, Inc. (NASDAQ:NFLX) has also shifted away from bulk content deals, looking to lock up exclusive content that it believes will lure subscribers. To that end, it inked a deal with The Walt Disney Company (NYSE:DIS) for some of that company’s kids themed content. At the same time, however, it took a hard line with Viacom, Inc. (NASDAQ:VIAB), letting a content deal expire over the ability to be selective about what it was getting.
Amazon.com, Inc. (NASDAQ:AMZN) jumped on that event and signed on for Nickelodeon content, boosting its position with the kiddie set. However, with The Walt Disney Company (NYSE:DIS) already on board, Netflix, Inc. (NASDAQ:NFLX) could afford to let Nickelodeon content slip away. That said, the Amazon Prime offering, which somewhat oddly pairs free shipping with video streaming, likely has enough to keep cost-conscious customers from jumping ship.
That’s a win for Amazon.com, Inc. (NASDAQ:AMZN), though maybe not for investors. Amazon.com, Inc. (NASDAQ:AMZN)’s shares are trading near all-time highs despite razor-thin margins in the low single digits. While a growing top-line is impressive, investors will likely jump ship if the company doesn’t figure out how to get margins back into the mid single-digits. Rising costs for content won’t help that effort, though Prime is clearly only a small part of the company’s overall business.
The Latest Deal
Netflix, meanwhile, has just inked a forward looking deal with Dreamworks Animation Skg Inc (NASDAQ:DWA). While the Disney deal provides an archive of content, Dreamworks Animation Skg Inc (NASDAQ:DWA) is going to create 300 hours of original content just for Netflix.
