Netflix, Inc. (NFLX): Will Amazon.com, Inc. (AMZN) Dominate Video?

The percentage of Prime customers who are watching free content through the Prime Instant Video platform has increased substantially from a year ago. Also, Prime memberships have gone up dramatically on a year-over-year basis, and these consumers are watching their free content and purchasing additional digital offerings as well.

In addition, Amazon is signing video licensing agreements with big name studios like Time Warner Inc (NYSE:TWX) and Turner Broadcasting. And going forward will add original and exclusive content on both Amazon Instant Video and on Amazon Prime Video. The substantial amount of newer and exclusive content offerings should aid in getting more subscribers for the Video offerings from Amazon. Amazon even struck a content deal with EPIX Pharmaceuticals, Inc. (PINK:EPIX), which was a major supplier to Netflix. Amazon is willing to spend big money on landing content deals, as Epix’s deal with Netflix was costing an estimated $200 million annually.

Amazon is also producing original content, just like its video streaming rivals, Hulu and Netflix. The original content strategy has worked very well for Netflix, as its recent release was very well received and generated significant public attention as well.

Amazon.com, Inc. (NASDAQ:AMZN) is in the process of producing numerous pilot episodes through Amazon Studios.  It will take the opinions of its subscribers based on the pilot episodes, to decide whether to produce the content or not. The crowd-sourcing process might aid in determining the probability of a TV Show’s success, but it might be inaccurate as well. However, original content differentiates the service from rivals like Netflix, and Hulu as the show will be available to the subscribers of Amazon only.

Amazon has stated that users are more likely to frequent its e-Commerce platform, when they are enrolled members of Prime. As a result, the company can attribute some of its content costs, to its online store, and add more content. Amazon gets to use its original content through three different services, and market it through its massive ecosystem and hardware devices. However, it faces pretty stiff competition from the category leader, Netflix.

The article Will Amazon Dominate Video? originally appeared on Fool.com and is written by  Ishfaque Faruk.

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