The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (

Trefis

--

Amazon

(AMZN) - Get Report

recent launch of an unlimited video streaming service for Amazon Prime customers won't post much of a threat to rival

Netflix

(NFLX) - Get Report

in the short term.

Amazon is a leading online retail player selling a variety of products including electronics, apparel, books, DVDs and music. It competes with

eBay

(EBAY) - Get Report

,

Wal-Mart

(WMT) - Get Report

,

Costco

(COST) - Get Report

,

Best Buy

(BBY) - Get Report

and

Overstock.com

(OSTK) - Get Report

in this market.

A few weeks back,

we discussed how Amazon's recent decision to offer unlimited video streaming

could further popularize its Prime service and attract more consumers to its online shopping platform.

Here we examine Amazon's potential in the online streaming market and whether it can successfully compete with Netflix. We maintain

a $181 price estimate for Amazon

stock, in line with the current market price.

Netflix's Content and Licensing Arrangements Hold an Edge Over Amazon

Amazon's online streaming service comes free with Amazon prime membership, which costs around $79 per year, while Netflix's comparative service costs around $96 per year. Amazon's streaming service comes out to be cheaper than Netflix's, but as we stated above, we believe that Amazon does not pose much of a threat to Netflix in the short term because it lacks the content and licensing arrangements that Netflix possesses. Amazon will offer only 5,000 movies and TV shows through its latest online streaming service, while Netflix offers more than 20,000 titles in its catalog.

Netflix also has licensing arrangements with Starz and Epix that provide access to recent

Disney

(DIS) - Get Report

, Lionsgate, and Sony films, while Amazon does not have any such arrangement. Moreover, Netflix recently struck a two-year content deal with

CBS

(CBS) - Get Report

(NYSE:CBS), which will further expand its selection of TV shows.

Can Amazon Compete with Netflix in the Long Term?

Although Amazon lacks Netflix's level of content and licensing arrangements for its online streaming service, it does offer more than 90,000 movies and TV shows that customers can buy or rent through its digital video service called Amazon Instant Video. This service consists of movies that are available as soon as they are released on DVD, and TV shows that are available the day after their first broadcast. However, these new selections come at a higher cost to Amazon as it has to pay higher license fees to content providers for providing the fresh content. Hence, if Amazon wishes to expand its online streaming service to include these selections and compete with Netflix, it will have to incur higher operating expenses, reducing profit margins for the company.

See our full analysis and $181 price estimate for Amazon

.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.