Why Amazon’s deal with HBO could help it challenge Netflix

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May. 6 2014, Published 8:00 a.m. ET

Amazon inks a deal with HBO to challenge Netflix

Recently Amazon (AMZN) announced that it has locked in a deal with HBO for its video streaming service that will offer some older shows starting this month. This is the first time that HBO, owned by Time Warner (TWX), has licensed its programs to an online streaming service. Plus, HBO Go will be available on Amazon’s Fire TV by the end of this year. This deal intensifies Amazon’s battle with Netflix (NFLX), which is a clear leader in online video streaming, mainly due to the original programming it offers.

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Amazon surpassed Hulu and Apple in the U.S. video streaming market

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Amazon’s Prime Instant Video service has surpassed both Hulu and Apple (AAPL) in terms of the volume of video streaming traffic consumed from the site to U.S. broadband subscribers, as per a report from Qwilt. According to this report, Amazon’s traffic volumes increased by 94% over the previous 12 months, while in some U.S. operator networks, between March 2013 and March 2014, Amazon’s streaming video traffic increased nearly 300%. However, Amazon still lags behind Netflix and Google’s (GOOG) YouTube, which are the leaders in this market, with a combined share of 74%.

Amazon’s Prime Instant Video is making rapid strides

Amazon has been trying to get exclusive subscription for some popular TV shows and movies. For example, on April 1, 2014, Amazon announced that as part of its licensing agreement with Twentieth Century Fox Television Distribution, Prime Instant Video is now the exclusive online-only subscription home for streaming all 192 episodes of the award-winning series 24. Prime Instant Video will also be the exclusive online-only subscription home for streaming 24: Live Another Day later this year

Amazon hiked Prime membership fees a few weeks back

In lieu of exclusive subscriptions for some popular TV shows and movies, Amazon hiked its Prime membership fees from $79 to $99 last month for the first time since its launch nine years back. The increase in fees was also because of increases in the variety of streaming shows and movies, which customers have been demanding for a long time.

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