Netflix, Amazon Build on Momentum as Their Content Efforts Are Paying Off

The billions that Netflix (NFLX)  and Amazon (AMZN) are spending to develop original content are paying off, with an increasing number of subscribers saying that's why they're willing to pay for the services, according to a note from IT research firm 451 Research on Monday. 

According to the firm's quarterly Voice of the Connected User Landscape (VoCUL) survey of 1,270 North American respondents, 33% chose their streaming service for its original content, which is up eight percentage points from a year ago. The survey choices of "access to movies" and "access to complete seasons of TV shows" were the top reasons to choose a streaming service at 50% and 45%, respectively, but they saw less year over year growth than "original content."

"The momentum which original content has grown in terms of importance over the years in these quarterly surveys is pretty incredible," said 451 Research managing director Andy Golub. "If you look back in our surveys over the past few years, original content was not nearly as high as the movies and TV categories." 

This means there shouldn't be as much investor push-back about expectations for Netflix to spend $6 billion on content in 2017, up from $5 billion in 2016 or about Amazon spending $4 billion on content in 2017, up from $3 billion this past year. 

With both services pushing further into the original content scene, its importance has increased for the subscribers of Netflix and Amazon in particular vs. Time Warner's (TWX) HBO and CBS's (CBS) Showtime. The VoCUL survey showed that 36% of Netflix subscribers chose the service for its original content, an increase of nine percentage points year over year, and 36% of Amazon Video users chose it for its original content, up 14 percentage points year over year. 

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