This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Amazon One Deal Away From Catching Netflix

NEW YORK ( TheStreet) -- Amazon (AMZN - Get Report) is dealing yet another blow to Netflix (NFLX - Get Report), striking a deal with NBCUniversal for streaming video content.

This is the second deal in a week Amazon has announced, forming a similar partnership with CBS (CBS - Get Report) just last week.

This brings Amazon's portfolio of movies and television content to about 9,000, and while this is less than half of Netflix's 20,000 or so titles, it brings Amazon Prime one step closer to competing with the movie rental giant.

Janney Capital Markets analyst Tony Wible noted that Amazon is only a deal or two away from having a very comparable library to Netflix. A deal with say Liberty Starz (LSTZA), for example, would very quickly close the gap.

The competition for Netflix has been heating up. Aside from Amazon, Wal-Mart (WMT) is also looking to steal a piece of the pie. The retail behemoth is aggressively promoting its own streaming network,, and just this week said it will make many movies available for streaming the day they come to DVD.

These concerns are especially pronounced given Netflix's latest move to raise subscription rates, which has generated an outcry from members. During its second-quarter earnings call, CEO Reed Hastings addressed the rate hike and did warn that he expects to see some subscribers cancel their membership as a result.

"I think the Amazon/NBCUniversal deal shows that Amazon is committed to this space and may in fact see an opportunity to gain share given the anger within Netflix's own subscriber base," Wible said.

Wall Street is echoing this sentiment.

"The deal is a signal that they are serious about streaming, and that they will offer a competitive service in the future," said Wedbush analyst Michael Pachter.

But Pachter said ultimately Amazon's Prime program won't continue, expecting the e-commerce giant to instead move to a subscription model. He predicts Amazon will offer virtually everything they currently offer at $1.99 or less per view, and let people watch what they want.

"They can do this and pay the studios $1.20 per view, and the studios can't complain," Pachter said. "As long as they charge enough per month, they can make money. With the Netflix price increase, I could see Amazon offering unlimited streaming of $1.99 and lower, plus two $5 video-on-demand movies for the same $15.98. That would be competitive with Netflix."

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
AMZN $375.56 0.00%
CBS $60.68 0.00%
CMCSA $58.42 0.00%
NFLX $571.55 0.00%
AAPL $124.75 0.00%


DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs