Netflix-Comcast Partnership Won't Damage Amazon's Prime Video

Analysts still see the Amazon service as the one to beat.
By Tony Owusu ,

Comcast (CMCSA) - Get Report has given Netflix (NFLX) - Get Report its stamp of approval by making the content streaming service available on its X1 set-top boxes. While the move could put pressure on Amazon (AMZN) - Get Report and its Prime Video rival streaming service, it won't shift Amazon's plans for Prime Video, says the team at Growth Seeker.

"In our view, Amazon's Prime service ... remains the service to beat," Growth Seeker co-managers and Cocktail Investing co-authors Chris Versace and Lenore Hawkins wrote in an Alert to subscribers this week. "The bottom line is we see [offering Amazon Prime Video as a stand-alone service] as another step in the company's strategy to grow its Prime subscriber base. We'd note that Amazon's strategy is to unveil these new offerings in the U.S. before launching them in other markets outside the U.S."

The bottom line for Netflix, however, is that it will be more accessible following its deal with Comcast -- a key holding of the Action Alerts PLUS charitable trust. "Comcast is a step ahead of the game with its X1 Platform, allowing for a personalized, technologically integrated, seamless experience in an easily consumable format. The X1 platform is helping to usher in a new age of content consumption that can compete with the experiences of the à-la-carte services," Action Alerts PLUS co-managers Jim Cramer and Jack Mohr wrote in a recent note.

Comcast is a holding in Jim Cramer'sAction Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells CMCSA? Learn more now.

Still, whatever Comcast and Netflix gain through this partnership won't alter Amazon's plans and its recent push into content creation and distribution through its Amazon Prime Video platform.

The Growth Seeker team sees Amazon Prime Video as a means to an end. Amazon is hoping to use its Amazon Video content as a carrot to draw subscribers to its full suite of Prime offerings. In April, Amazon announced that it is offering its video service as a stand-alone subscription for $8.99 a month. At the same time it is also announced that it is offering its full Amazon Prime service, which includes video, for $99 annually or $10.99 for a monthly subscription.

Meanwhile, Comcast's and Netflix' new partnership is a complete 180-degree turn from the animosity the two companies have shown toward each other in recent years.

In 2014, Comcast, which sits in a unique position because it is both a content producer (through its purchase of NBC Universal) and distributor, insisted that Netflix pay a fee for its service to be offered through its internet service. At the time, Comcast insisted that the fee was justified since Netflix streaming was responsible for an inordinate amount of data consumption.

Netflix responded by aggressively lobbying the Federal Communications Commission to reject Comcast's proposed takeover of DirecTV. However, the hatchet seems to have been buried, and the two media content creation and distribution titans are now working together.

Once Comcast does offer Netflix on its platform it will be interesting to see how the latter's subscription numbers react. In the meantime, the complicated dance between content producers and distributors just got more intricate.

Despite the good news, Netflix shares fell more than 3% Wednesday, while Comcast was just about even and Amazon closed trading at a new all-time high of $737.61.

Editor's Note: This article was originally published at 5:15 p.m. EDT on Real Money on July 6.

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