Competition in the streaming video space is clearly starting to heat up. Traditionally dominated by Netflix (NFLX -9.09%), a number of serious rivals are starting to crop up, one being Hulu. However, Amazon.com (AMZN -2.56%) is now also starting to seriously ramp up its Amazon Prime service, which provides consumers with streaming series and movies at a slightly lower price. Are Hulu and Prime Instant Video a serious threat to Netflix's dominant position in the industry?

Hulu
Hulu, owned by Walt Disney (NYSE: DIS), Comcast (NASDAQ: CMCSA), and Twenty-First Century Fox (NASDAQ: FOX), offers some content sooner than Netflix and has an impressive library boasting approximately 86,000 episodes from nearly 2,900 series. However, at $7.99 per month, Hulu Plus is a little pricier than Instant Video, and users are apparently also still required to watch commercials.

Disney and Fox both own roughly one-third of Hulu. Comcast owns the remaining third, but is now unable to exert any real influence due to regulatory measures imposed following its acquisition of NBC Universal. As recently as March 2013, its owners were planning to sell the streaming video company, with Disney and Fox reportedly disagreeing over how to grow revenue. However, these plans have since been abandoned, its owners agreeing on a recapitalization and pumping nearly $750 million into the service. 

Hulu's original content does not have the same widespread appeal of Netflix's offerings. On the other hand, it is growing quickly. In December, Hulu stated that its fiscal 2013 revenue would jump by almost 44% to reach $1 billion. According to a Netflix downgrade note from Morgan Stanley analyst Scott Devitt, the streaming video space will become increasingly crowded in 2014 as content owners become more willing to license content to online video providers like Hulu.

Amazon Prime Instant Video
The other threat to Netflix is Amazon's Prime Instant Video service. Amazon recently announced its most recent Prime subscription numbers, and they are daunting. The total number of worldwide Prime subscribers has now topped 20 million, according to a research note from analyst Ben Schachter, and following Amazon's rather vague statement that it had "tens of millions of members worldwide."

Prime is probably best known for the free two-day shipping service available to subscribers who purchase tangible goods via the Amazon marketplace, but it also includes the company's free streaming video service called Prime Instant Video. At $79 per year, Amazon Prime is cheaper than Netflix, and also releases a number of titles earlier than Netflix. On the other hand, Amazon Prime may have quite a bit of work to do to match Netflix's range of personalization and recommendation options, as well as its sizable market share.

Currently, Amazon's presence in the online streaming world is negligible, but that may soon change. So far, Amazon has pumped quite a bit of money into its offerings, but has spent very little on marketing its streaming video service. However, a new television commercial specifically advertising the company's Instant Video service is clearly aimed at raising awareness and comes across like a challenge to Netflix.

Looking back, Netflix didn't have a bad 2013, boosted in part by original content such as House of Cards and Orange is the New Black. However, some analysts are questioning the sustainability of the company's growth in the face of increasing competition. Netflix was recently downgraded by Morgan Stanley for this reason, as companies such as Amazon and Hulu may eat into its ability to grow its subscriber base.

The bottom line
Netflix's dominance in the streaming video arena does not look as secure as it did a few years ago. Competitors Amazon and Hulu are stepping up their game, offering more and higher-quality licensed and original content. While they both still have a way to go to catching up to Netflix's market share, analysts believe Netflix may have a hard time sustaining growth as competitors grow their own subscriber bases.