Amazon or Netflix: Who's Winning the Video Streaming Wars?

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Things are heating up between (NASDAQ: AMZN  ) and Netflix  (NASDAQ: NFLX  ) , as the Web warlords are vying for a bigger piece of the digital streaming market. Both companies are heavily investing in content creation, but will it be enough to stave off competition in the increasingly important streaming business?

Let's look at which company offers the best streaming bang for your buck, and which stock is a better bet for investors.

Video mavens
With so many digital streaming options available to consumers today, Amazon and Netflix are getting ahead by betting on original content and beefing up their video libraries. The world's largest online retailer first introduced its Amazon Instant Video service in 2011 as part of its Prime program.

For just $79 a year, Amazon Prime Members get free two-day shipping, unlimited streaming of movies and TV shows, and access to books in the Kindle Owners' Lending Library. Today, Amazon's content catalog has grown to include more than 140,000 videos.

In addition, Amazon Studios is now streaming 14 pilots free of charge to viewers whether or not they're Prime members. Viewers are then encouraged to vote on their favorite pilot. Amazon plans to develop those with the most votes into full series. Testing audience tastes is a smart plan for Amazon, particularly if it hopes to produce a runaway success like Netflix's House of Cards.

Neck and neck
Netflix's new hit series should continue to drive subscriber growth for Netflix, because you can't watch it anywhere else. However, compared with Amazon, Netflix offers fewer titles, with about 75,000 movies and TV shows.

In terms of cost to user, Netflix offers its streaming service for a monthly fee of $7.99. This means Amazon Prime members paying $79 per year save more than $1 per month over Netflix subscribers. Still, these price points are similar enough that it shouldn't make a material difference to consumers.

Ultimately, it comes down to consumer tastes. For this reason, I think Netflix is the more compelling streaming service today, despite Amazon's vast library of content. On the other hand, Amazon looks like the better stock to own. True, both of these stocks are wildly expensive at their current valuations. However, Amazon counts multiple revenue streams outside its streaming and entertainment business. As a result, the stock's future is far more certain than are shares of Netflix.

Everyone knows Amazon is the king of the retail world right now, but at its sky-high valuation, most investors are worried it's the company's share price that will get knocked down instead of its competitors'. The Motley Fool's premium report will tell you what's driving the company's growth, and fill you in on reasons to buy and reasons to sell Amazon. The report also has you covered with a full year of free analyst updates to keep you informed as the company's story changes, so click here now to read more.

Read/Post Comments (2) | Recommend This Article (2)

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  • Report this Comment On May 08, 2013, at 10:22 AM, bgbevan wrote:

    This article is mostly bogus. As with many articles on this subject the author has little or no actual experience with either service. First and foremost, Amazon and Netflix are not really competitors.

    1. Amazon's business model is not based on revenue from streaming. Amazon is interested in selling stuff and Prime is a loss leader that gets people in the door and committed to Amazon purchases.

    2. You do not get "unlimited streaming of movies & TV shows" from Amazon for $79 a year. There is some content that you can stream for free but for the most part you will pay through the nose for the rest of the content. $3.99 to stream a movie, $1.99 for HD(720P), etc. If you are an economy-minded cord cutter, you will quickly find your entertainment bill approaching or exceeding what your cable company charged. I challenge anyone to pay only $79 a year to Amazon for just streaming services.

    3. The streaming market is not an either or proposition. It's not Amazon vs Netflix vs Hulu vs whoever. In actuality, many users are buying from several streaming services. I personally use Netflix & Hulu. It's still way cheaper than my $125+ per month cable bill and this 2 service combination works for my viewing needs. I expect there will be a lot of churn in this area as users try different combinations and the content landscape continues to evolve.

    So while this article has an eye catching tag line, "Amazon vs Netflix, Who Will Win?", it is not founded in reality. Authors should get some hands-on experience before they jump on the bandwagon to get their material published.

  • Report this Comment On May 08, 2013, at 3:41 PM, NorthernPaladin wrote:

    I agree with bgbevan -- Motley Fool is almost always out in left field when it comes to Netflix analysis, particularly when it comes to their "competition", and this article is no exception.

    Amazon Prime, which I have had for years primarily for the free two-day shipping, is less useful than Redbox for finding something to watch. They seem to run monthly specials where there will be a couple of pretty good A-list movies available but their overall selection is awful. Amazon does have a pretty good streaming selection overall but the good stuff is pay-per-view and not included in Prime.

    Netflix has done wonders with their streaming selection and is the primary reason I canceled cable last year. They have a very nice selection of TV series and their movie selection for streaming has quite a bit of everything other than recent A-list American movies (which, presumably, want too much for a license). I still subscribe to Netflix DVD service though so I can get my A-list American movies through Netflix DVDs and everything else through streaming.

    I really only go to Amazon if there's something I must see today and Netflix only has it on DVD or if it's a series that Netflix isn't streaming, isn't on DVD yet and is really only available from Amazon for $1.99/episode. Then I'll pony up the cash to watch it through Amazon....or I'll wait until Netflix gets it.

    I challenge the author of the article, or anyone who wants to understand streaming options today, to cancel their cable for 6 months. You will quickly become an expert on which streaming services are really worth their bucks and which are mostly just tack-on services for something else and rarely come in handy.

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