2,000 More Reasons to Swap Netflix for Amazon

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Star Trek fans now have a new reason to pay (Nasdaq: AMZN  ) $79 a year for free two-day shipping through its Amazon Prime membership plan.

All episodes of the original Star Trek series -- along with 17 other television shows owned by CBS (NYSE: CBS  ) , including Cheers, Frasier, and Medium -- have been added to the online retailer's digital vault of videos that Prime subscribers can stream at no additional cost.

Now that Netflix (Nasdaq: NFLX  ) has stopped offering streaming at no additional cost to DVD plan subscribers, Amazon is stepping up to fill the void. (In fairness, Netflix subscribers won't entirely miss out, since many of the programs included in Amazon's deal are also available via Netflix streams.)

Amazon didn't seem to rock the world when it began to offer 5,000 videos as cost-free bonuses to Prime members in February. The options were up to 6,000 last week, but the CBS deal pushes the options up to an impressive 8,000 titles.

Even if you were never a fan of Numb3rs or The Tudors, it's hard to turn down what's essentially a freebie to Amazon's millions of Prime subscribers.

The challenge at this point is to make the content available outside of the PC. Netflix has spent the past four years building up its arsenal of ways to put its licensed streams into home theaters, working with Blu-ray players, DVR makers, set-top boxes, and video game consoles.

Amazon has some serious ground to make up there.

Amazon streams its premium videos through TiVo (Nasdaq: TIVO  ) , but Prime instant videos aren't available that way yet. Netflix streams through all three video game consoles, which is three more consoles than Amazon can use to reach viewers.

However, there's a legitimate opportunity for Amazon to replace Netflix, at least for frequent online shoppers who are hesitant about shelling out $7.99 a month -- or more than Prime's $79 a year -- to Netflix for its larger streaming catalog.

It doesn't have to end there. Amazon will never build out a regional network of DVD distribution centers, but it can offer most of Hollywood's new releases and fresh television episodes a la carte through its premium streams. All it needs is to get a larger audience to go through the hassle of tethering their compatible devices with Amazon's streaming service. Teaming up with Coinstar's (Nasdaq: CSTR  ) Redbox is another solution. That option has been rumored since last year, long before Amazon even began to take on Netflix with its unlimited streaming product.

Amazon is suddenly in a better position than anyone else to exploit Netflix's new vulnerability. Even Star Trek's cool-headed Spock can't argue with that logic.

Will Amazon be able to take market share from Netflix? Share your thoughts in the comment box below.

Motley Fool newsletter services have recommended buying shares of, Netflix, and Coinstar, as well as buying puts in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.  

Longtime Fool contributor Rick Munarriz has been shopping online since the early 1990s. He does not own shares in any of the stocks in this article, except for Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

Read/Post Comments (5) | Recommend This Article (4)

Comments from our Foolish Readers

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  • Report this Comment On July 21, 2011, at 3:31 PM, chadhenage13 wrote:

    While I don't disagree that Amazon could be in a better position to compete against Netflix there are a few things to keep in mind.

    1. This deal for Amazon wasn't free, in the same way that people worry that Netflix will have to pay up for content so does Amazon. The difference is Amazon as you pointed out doesn't have all of the built in apps that Netflix does to allow Prime users to stream on many devices. The fact that Amazon now will have 8,000 titles is a step in the right directly but not enough. If Amazon wants to get serious about this game I'm thinking Hulu is the best bet.

    2. The step for Amazon worries me that like the old quote, "It's so popular that no one goes there anymore." I'm thinking along the Peter Lynch lines of could streaming be so popular that "no one makes money there anymore". It just seems if Amazon, Netflix and whomever buys Hulu all are going after the same crowd isn't there something to be said of these three players squeezing each other's margins?

    I think this is good for the consumer but I would be worried about stepping up to the plate to buy either Amazon or Netflix because of these factors.

  • Report this Comment On July 22, 2011, at 9:47 AM, mikecart1 wrote:

    1. Star Trek is for nerds.

    2. Amazon streaming video is terrible.

    3. The Prime Membership for Amazon is a joke unless you can get it for free like I did this past year. When items over $25 are free anyways, you are basically paying a premium to have free shipping on cheap junk under $25 or to get things in 2 days or less. Don't be fooled. I ordered something from Amazon May 27 and still haven't received the order. I have contact customer service several times and all I have gotten was a couple of "sorrys" and $10 credit to my account.

    4. Netflix works with PS3 which is 10x better than using Amazon on your computer.

    5. Amazon has even worse streaming movie selection than Netflix - if that was even possible.

    I am not really a fan of either. I am a member of Netflix only recently because I like to watch a few shows I missed growing up like MacGyver and Chapelle's Show. The movies are mostly terrible. The NOVA shows are decent. Amazon however has the worst shows in the universe and their streaming player sucks big time.

    These are the facts, and they are undisputed.

  • Report this Comment On July 22, 2011, at 10:26 AM, David369 wrote:

    I don't know if Amazon is really serious about streaming or if they are just "testing the water" or found something for little cost that they could add some value to their prime membership. I mean really, like "hey, I'm gonna take the night off and really relax with some popcorn and watch (whatever) on my computer" ...NOT gonna happen. IF I was the kind to really want to watch various streaming shows or movies I would certainly pay 8 bucks (what, is that 2 starbucks coffees now) to do it on my big screen TV not my computer monitor. Ok Amazon wil probably include free streaming to their new tablet or something to entice people to buy it. For the masses of screen addicted viewers I don't think the majority will either know how or want to hassle with running the feed from their computer to their TV screen. So unless Bezos the magician does another trick I think he has a hat and no rabbit at this point.

  • Report this Comment On July 22, 2011, at 12:20 PM, TMFBent wrote:

    Amazon needs to ge the rights to stream this stuff to more devices (xbox, phones, etc.) and if they do, netflix is in big, big trouble. Amzn should buy hulu for this reason alone.

  • Report this Comment On July 22, 2011, at 6:52 PM, BentMike wrote:

    I never hear mention of the reason why I don't use the Amazon Prime - I don't care about any of the other features than streaming (I never seem to want much that is fulfilled by Amazon so I never benefit from the shipping deals). Lord knows i pay for a lot of shipping.

    I don't really care about the titles in the Amazon catalog of movies as much as I like the quirkiness of Netflix. I MUCH prefer the Netflix GUI.

    I kind of hate the unrelieved "buy this" commerciality of Amazon - unless I am actually shopping. Somehow, I am always surprised by things costing more than I expected through Amazon. It is like an itch I can't scratch.

    I suppose I could succumb to a huge uptick in streaming choices from Amazon. Or I could make a lot more money so I don't care that I waste the fee even though I don't watch much at AMZN.

    Right now when I look at cost I think, Amazon vs Netflix, together they cost too much for the amount of watching I do. The experience at Netflix is better - 2000 so called reasons don't scratch the surface I will even pay $16 a month for it with no hidden costs.

    It is funny, but I don't mind the smaller monthly payment to friendly Netflix, and the lower annual payment to the monolithic more obviously avarice driven Amazon seems like a lesser value.

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