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Amazon’s Streaming Partners Program Will Attract Prime Members

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Amazon added other TV networks

A few weeks ago, Amazon (AMZN) announced its Streaming Partners program. It’s an OTT (over-the-top) subscription service. This program will enable users to watch shows from CBS (CBS) Showtime, Starz, and dozens of other networks for a subscription fee. Users can subscribe to Showtime and Starz for $8.99 per month.

This is a strategy to attract more users to subscribe to Amazon’s Prime membership program. The Prime membership costs $99 per year. However, Amazon’s initiative is a threat to Netflix (NFLX). Currently, Netflix is the leading player in the video streaming market. Hulu will also be challenged by Amazon’s new service. Hulu offers Showtime for $8.99 per month in addition to Hulu’s ad-supported service for $7.99 per month.

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Netflix leads the video streaming market

According to a Huffington Post report dated July 29, 2015, citing research by CIRP (Consumer Intelligence Research Partners), Amazon Prime had about 44 million members. As the above chart shows, Netflix had total streaming memberships of 65.5 million as of June 2015. During the fiscal 2Q15 earnings call from 21st Century Fox (FOXA), management stated that Hulu was approaching 10 million memberships. Hulu is owned by 21st Century Fox, NBCUniversal (CMCSA), and the Walt Disney Company (DIS).

To gain exposure to Netflix, you can invest in the SPDR S&P Retail ETF (XRT). XRT maintains 1.3% of its holdings in Netflix.

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