Case in point: The rival services compete in several important regards -- customers, talent, and content.
Because of Amazon's preference to keep its user figures secret, comparing Prime streaming to Netflix in a head-to-head sense is guesswork at best. However, recent proxy data can help shed some insight into perhaps the most important rivalry in streaming media today.
Netflix more popular than Amazon?
According to a recent report from broadband utilization analysis firm Sandvine (via Recode), Amazon Video remains significantly less popular than Netflix in terms of its usage.
Per Sandvine's latest internet usage report, Netflix accounts for a staggering 35.2% of all U.S. prime-time broadband downstream traffic. The term "downstream" is simply an industry term referring to data received by computers and networks -- things like sending emails, surfing the web, or streaming video content.
This makes Netflix by far the largest single user of broadband network traffic, effectively double the second-largest source of internet usage, Alphabet's YouTube, at 17.5%.
Amazon Video, on the other hand, comprises a still sizable 4.3% of all prime-time U.S. internet usage. According to Sandvine, Amazon's U.S. prime-time bandwidth usage has increased from 1.3% three years ago, so the service's usage is indeed growing at an impressive rate, albeit from a relatively diminutive base. Either way, Netflix is roughly 8 times the size of Amazon Video in terms of downstream traffic. Viewed this way, the comparison between the two isn't even close. However, it's equally important, if not more so, to note that the rival service actually exists for very different reasons.
Similar but different
Netflix was founded as an entertainment service, and it remains firmly rooted in that mission today. On the other hand, Amazon Video comes as an added benefit to Amazon's Prime ecosystem in which free two-day shipping is likely the primary motivator for the majority of members. As such, Prime streaming should be thought of as a "sweetener" type of benefit that could tip the scale in a consumer's decision to subscribe to Prime, rather than a primary driver of Prime subscriptions in and of itself.
According to a recent survey from CutCableToday, only 10% of Amazon Prime members reported using their Prime Video benefit on a daily basis, while 20% of respondents had never used Amazon's video service. The remaining 70% of Prime subscribers essentially split down the middle between those who used Prime streaming on weekly and monthly intervals. A similar study from the same research firm found that 41% of Netflix subscribers use that service on a daily basis.
Seen this way, it seems pretty clear-cut that Netflix and Amazon simply attract different types of users, who subscribe to the two services for very different reasons.
It's also worth noting that the reported usage figures aren't meant as a proxy for subscribers, just aggregate usage during peak hours for streaming services. In fact, some well-regarded research firms argue that Amazon Prime actually counts more domestic subscribers than Netflix. Prime is also estimated to be growing at much faster rates than Netflix in the U.S., although given the broader appeal of Prime's features, this shouldn't necessarily come as a huge surprise.
So while they are indeed competitors in some truly important regards, it's also useful to remember that key differences between the two services exist.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Andrew Tonner has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), 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.