Amazon (AMZN -1.64%)recently announced that it will film all of its 2014 original series in the new 4K Ultra HD format. The 4K Ultra HD format will allow users to watch Amazon features in a resolution with four times the number of pixels displayed in the standard, full HD format. This will give customers a better screen image with improved clarity, sharpness, and smoother lines.
For 4K Ultra HD to really take off, the market needs a leader to move in the space and produce content. Amazon could be making that move. It would fill a void for tech-savvy consumers who own 4K TV hardware and are actively looking for content.
Amazon's continued investment in new technologies shows the company's commitment to be a leader in growing market segments. Investment in areas of growth include streaming content, tablets, and cloud computing. Investors need to understand that these continued investments in growing technologies are a reason why Amazon reported a net loss of $41 million in the third quarter of 2013.
Amazon is already showing amazing growth: The company reported $17.1 billion in revenue in the third quarter of 2013, which is a 24% increase over the $13.8 billion reported in the third quarter of 2012. Leadership in the 4K market should translate into expanding revenue for Amazon as more consumers adopt the new HD format.
Netflix has big plans for 4K Ultra HD, too
Netflix (NFLX -3.92%) has plans to stream content in 4K Ultra HD within the next year or two. The company has indicated that it has already recorded its original series House of Cards in the 4K format and hopes to make the 4K Ultra HD version available later this year .
Netflix sees streaming video as the best delivery system for 4K Ultra HD content and hopes to capitalize on the latest technology. Netflix is already showing serious growth: It reported $1.1 billion in the third quarter of 2013, a 22% increase as compared to the $905 million reported in the third quarter of 2012. The addition of 4K services should help grow the company's revenue as new customers subscribe to experience Netflix's 4K streaming service.
The question is whether Netflix or Amazon will be first to roll out 4K Ultra HD content as a streaming service. For Netflix to be competitive, the company will need to capture a lot of content licensing for 4K content.
Beating Amazon to market with 4K streaming services would give Netflix a strong foothold in the market, and Netflix is in a strong position to make the investment. The company reported net income of $32 million in the third quarter of 2013. Netflix's reinvestment in 4K technology could help pave the way for a market-dominating 4K Ultra HD streaming service.
Sony has 4K Ultra HD technology
Back in September, Sony (SONY 1.10%) launched its Video Unlimited 4K service, the first download service for the 4K Ultra HD format. The service was launched with 70 feature films and TV shows for rent or purchase on Sony's 4K Ultra HD media player. The launch served as a marketing tool to boost sales of Sony's 4K TVs and media player. Due to the limited availability of 4K content, Sony needed to launch the Video Unlimited 4K service to support the company's new 4K hardware.
Sales for 4K TVs and media players should increase due to the availability of content through Sony's Video Unlimited 4K service. Amazon and Netflix rolling out 4K content should also help boost Sony's 4K hardware sales. Sony can use the help -- sales for the third quarter decreased 9%, year over year.
Investors should watch for the release of 4K content from Amazon and Netflix and look for a possible boost in Sony 4K hardware sales. It's important to look for a correlation. This would be an indicator that Sony is capturing the 4K TV market and growing revenue as more consumers adopt the new HD format.
The bottom line
Netflix and Amazon are likely to be the leaders in providing 4K Ultra HD content to consumers. In the short term, 4K Ultra HD content services will mostly be attractive to tech-savvy consumers that have to have the latest and greatest technologies. The adoption of the 4K video format by Netflix and Amazon will help TV manufacturers market the next generation of TVs in the 4K Ultra HD format. In a very small market of 4K providers, Netflix and Amazon will likely become the go-to services for 4K Ultra HD movies and TV shows.
