Netflix (NFLX) is facing rising competition from Amazon’s (AMZN) Prime Video service. Netflix is focusing more on original content. It plans to spend $6 billion next year on acquiring content. Currently, 10% of its content spending is on original content. It plans to increase the content spending to 50%.
Amazon is especially focusing on increasing its original content. It plans to triple the number of its original shows—TV shows and movies. Some of Amazon’s prominent original series that are in production or have premiered are the new seasons of Transparent, Mozart in the Jungle, and The Man in the High Castle. Some of the original kids series include Tumble Leaf, Niko, and Sword of Light.
The following chart shows that Amazon’s spending on technology and content has been steadily rising. It rose from $3.2 billion in 3Q15 to $4.1 billion in 3Q16.
Netflix’s view on original programming from Amazon
These companies think that original content will strengthen their brand value and drive up the viewing hours for their content. Considering the focus on original content, Netflix was asked at the UBS Global Media and Communications Conference earlier this month whether it felt threatened by Amazon’s rising focus on original content. Netflix stated that compared to Amazon’s spending on original content, it didn’t appear that its original shows were generating much buzz going by the “data consumption” reports on Sandvine and Shack Track.
Netflix stated that its original content could result in the sale of more Prime memberships for Amazon.