Netflix/ Amazon Prime or HBO-- Who’s Winning the Streaming Video Battle?

HBO and Amazon recently announced a deal where Amazon will receive rights to air old HBO content like the Sopranos, The Wire, and several other shows. The deal includes content aired 3 years after its original air-date, but excludes Game of Thrones, True Detective, and Sex In The City. Let’s break down the streaming video competitors and see who wins and loses.

The Big Winner- HBO
HBO wins on a number of levels
  • 1.      financial details were not released, there is no doubt they’ll be receiving a pretty penny for the content they are licensing out.  
  • 2.      Viewers seeing the high quality of the shows will ancillary sales of HBO content unavailable on Prime, most likely via Amazon.
  • 3.      Seeing the high quality shows makes it more likely they’ll subscribe to HBO.


Amazon
Amazon just made their Prime membership much more attractive. They’ll also generate additional commissions from sales HBO’s other content I described above.
The only question in my mind is how much they paid for the licensing fees, but in terms of video streaming there is no doubt they are a winner.

Netflix
Well, their streaming competitor just got much stronger and they missed out content that they were undoubtedly dying to add to their offerings. Amazon's demand for content further puts upwards pressure on prices Netflix will have to pay for future content as well.

Reasons behind the move?
Part of the reason behind HBO’s move is the fact that Amazon allows far greater branding then Netflix. Network execs claim Breaking Bad did much more for Netflix than Netflix did for Breaking Bad and AMC, in part because Netflix didn’t want to give as much real estate to AMC branding.
Additionally, HBO gets ancillary benefits from selling other shows on the Amazon website, where Netflix doesn’t offer this possibility. The added sales also up the price Amazon can pay HBO for their content.

Complimentary Service?
Reed Hastings has stated that Netlix is a complimentary service to Amazon, and as more people discover one or the other, it will spur memberships in both.
It’s my belief that HBO will benefit much more than Netflix will from this symbiosis. People on Amazon are much more likely plow their money into HBO, and that goes triple if HBO ever decides to create a stand-alone web service without a cable subscription needed to view.

Bottom Line

Sorry Netflix stock owners, I love the Netflix service, I just wouldn’t to own any of your stock, especially at these ultra-high levels. Take profits in Netflix while you still can.  

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