The Competitive Landscape Is Evolving for Netflix



Competitive landscape

Competition is intensifying for Netflix (NFLX) in the United States. Netflix faces stiff competition from Amazon (AMZN) Prime Instant Video, Hulu, and other media companies’ direct-to-consumer offerings, such as Time Warner’s (TWX) HBO NOW.

Netflix’s management stated in an interview with Benjamin Swinburne from Morgan Stanley (MS) and Peter Kafka from Re/code on January 19, 2016, that the company considers Time Warner’s over-the-top (or OTT) offering HBO NOW to be a “formidable global competitor.” HBO NOW is rapidly expanding around the globe to geographies including Spain (EWP), Nordic countries, and some countries in Latin America.

Netflix was responding to a query regarding the possibility of a spin-off of HBO from Time Warner. We discussed the possibility of Time Warner being up for sale in an earlier series.

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Prime Instant Video

Netflix also stated that it has not yet observed a significant number of people opting for Amazon’s Streaming Partners Program through its consumer research, and as of now, it has no intention to offer the service as part of an OTT bundle.

Amazon is also producing original content and has signed Woody Allen to direct its first exclusive television series in 2016. Amazon has also entered into content-licensing deals with Viacom (VIAB) and HBO.

Late last year, Amazon announced the Streaming Partners Program, an OTT streaming subscription program. Under this program, Amazon has partnered with around 20 media companies. The new service will be available exclusively to Amazon Prime members. An Amazon Prime membership costs $99 per year, or $8.25 per month. The Streaming Partners Program provides viewers with free trial subscriptions.

Some of the content partners in this program, including CBS (CBS), Showtime, and Starz, are also offering special pricing for Prime members. A Showtime and Starz subscription will be available at a special price of $8.99 per month for Prime members in addition to the price of Amazon’s Prime membership.


Early this month, Hulu entered into a content licensing agreement with Sony (SNE) to show older content from the Sony Pictures library on its SVOD (subscription video on demand) platform. Hulu has also started offering an ad-free option plan for its users at $11.99 per month. Currently, Hulu’s free service is ad-supported, while its $7.99-per-month service provides content with fewer ads.

Hulu also offers Showtime for $8.99 per month on top of the $7.99 per month charge for a Hulu subscription.

Comcast (CMCSA) has also entered the OTT market. Early this month, Comcast launched its OTT platform, Seeso, priced at $3.99 per month. It offers primarily comedy programming.

Netflix makes up 0.97% of the PowerShares QQQ Trust Series 1 ETF (QQQ). If you’re interested in exposure to the television and radio sector, QQQ has 4.4% exposure to that space.


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