Amazon Prime vs. Netflix: Which Service Offers a Better Deal?

Amazon has stepped up its game by making a deal with HBO for some of it shows. Does that make its Prime Instant Video a better deal than Netflix?

Apr 24, 2014 at 2:55PM

News that Amazon's (NASDAQ:AMZN) Prime Instant Video service has added a number of popular HBO programs to its lineup comes just after rival Netflix (NASDAQ:NFLX) announced plans to raise prices for new customers sometime during the next few months and hike them for existing subscribers after a grandfather period of around two years.

Amazon recently raised prices on its prime service in the United States from $79 to $99. In addition to access to the company's video service Prime members also get free two-day shipping on million of items for sale on the online retail giant. 

It's not entirely fair to compare Amazon Prime Instant Video with Netflix on an apples-to-apples basis due to the added benefit of the free shipping Prime offers (which is likely the hook that lures in most customers). But with both services competing for rebroadcast rights for top shows and creating high-quality original video, it's still worth debating their merits purely as video services.

Looking at price

Current Netflix customers pay $7.99 a month or $95.88 a year (raise that price by a dollar per month, as is expected after the two-year grandfather period, and you are at $107.88). Amazon Prime Video members pay $99 a year or $8.25 a month. With similar price points, the choice likely comes down to content selection.

Who has more original series?

On its website Amazon touts a total of 10 original series in its coming-soon section including five for kids and five comedies and dramas for adults. It's fair to say none of the Amazon originals have been as well-received or generated anywhere near the hype of Netflix's most popular shows. The upcoming The After from X-Files creator Chris Carter may have a chance to change that, as it marks the producer's return to the type of show that helped make him famous. In addition there has been buzz building around Alpha House, which returns soon for its second season. The series stars John Goodman and comes from Garry Trudeau of Doonesbury comic strip fame.

Amazon took a novel approach to picking some of its series by making a number of pilots and having viewers vote on which ones should move to series. Bloomberg estimates that the company committed around $50 million in 2013 to creating original content.

Netflix rivals HBO and AMC (NASDAQ:AMCX) when it comes to offering highly anticipated shows. Netflix originals include kid programs, a number of comedy specials, and a variety of co-productions that are Netflix exclusives in the U.S. but air on television in other countries. In 2013 the digital streaming service had success with House of CardsOrange Is the New Black, a revival of Arrested Development, and Hemlock Grove. Going forward the company has new seasons of Cards, Black, and Grove, as well as a deal that will bring it multiple original series set in Marvel's Avenger's universe.

The company is currently spending around $2 billion a year on content acquisition (a number it forecasts will rise considerably), but only a percentage of that goes to original content.

In an October 2013 earnings call, Netflix Chief Content Officer Ted Sarandos explained that Netflix's spending on original content in 2014 will still represent less than 10% of overall global content spending, Variety reported. "About 40% of HBO's spending is on originals, Sarandos said, "so there's a big gap from where we are to where we could be." Though no specific numbers were given the company expects to increase overall content spending in 2014 and double its investment in original shows.

Both Amazon and Netflix are spending money creating original content, but Netflix is definitely producing more of it and so far has delivered more shows that connect with audiences.

Which has better content deals?

Lifehacker did an extensive survey comparing Amazon and Netflix and found that of the 250 most popular television shows, according to IMDB's MOVIEmeter, Netflix had twice as many shows from the list (122 vs. 58). Netflix also had the most exclusive shows with 54 titles airing only on its service while Amazon Prime Video had 17.

Neither service specifically releases how many hours of programming they offer but Netflix appears to have a deeper catalog featuring more newer programs while Amazon offers more classic series. There is overlap between the two services and both are deep enough that if you're not looking for a specific series there is a huge variety of programs to watch. 

To further confuse matters while Netflix may have more original shows and a lead in providing top programs, Amazon's new deal with HBO brings most of the network's signature series to Prime Instant Video.

Amazon will have rights to shows including The Sopranos, Six Feet Under, The Wire, Big Love, Deadwood, Eastbound & Down, Family Tree, Enlightened, Treme, early seasons of Boardwalk Empire, and True Blood, as well as mini-series like Band of BrothersJohn Adams, and more. Previous seasons of other HBO shows, such as Girls, The Newsroom, and Veep will become available over the course of the multi-year agreement, approximately three years after airing on HBO.  The first wave of content will appear on Prime Video May 21. This is the first time that HBO programming has been licensed to an online-only subscription streaming service. 

You may need both

Amazon Prime Instant Video lags behind Netflix but both services offer an almost unimaginable array of choices. The challenge is that while Netflix has more appealing originals and top series, Amazon has enough that it's likely most people will be missing something by only having one or the other. How many people who want to watch House of Cards would also be attracted to The Sopranos? The overlap is likely high and for people who have the time to watch a lot of television buying both services might be the smartest choice.

If you had to pick one and free shipping on Amazon is not a factor for you, then Netflix offers more for roughly the same money. It's a tough choice though because while Netflix has a programming lead both services have enough exclusive content to make a pick between one or the other more of a personal preference than something that can be approached with logic.

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Daniel Kline has no position in any stocks mentioned. He subscribers to Netflix and Amazon Prime but rarely remembers to use either. The Motley Fool recommends Amazon.com, AMC Networks, and Netflix. The Motley Fool owns shares of Amazon.com and 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.

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