Amazon's "Everything from A to Z" logo includes streaming video. Source: Amazon

When it comes to streaming video services, it's essentially Netflix (NASDAQ:NFLX) and everybody else. For perspective, Netflix boasts of 50 million subscribers, while outright competitor Hulu Plus in April of this year reported only 6 million. Semicompetitor (NASDAQ:AMZN) doesn't release numbers for its "bundle of services" product, Amazon Prime, but a third-partly analyst in September estimated subscriber counts of up to 50 million globally.

While subscriber accounts are important, they don't tell the whole story. Obviously, this is an effective monetization metric, but for user satisfaction it's perhaps better to compare hours viewed. And a useful proxy for hours viewed is Sandvine's Global Internet Phenomena Report. The report, which is published twice a year, measures Internet traffic during prime hours for a six-month period. And although Netflix retains its place as top-dog streaming video provider in the latest report, Amazon investors have a reason to be pleased as well.

Good news for Netflix
As expected, Netflix is the undisputed king of peak traffic once again. When it comes to downstream traffic -- as in when movies are being viewed by subscribers -- Sandvine reported a massive 34.89% of peak traffic is due to Netflix. The second-largest website reported here is Google's YouTube, 20 percentage points lower to take 14.04% peak traffic. Interestingly enough, Netflix came in second on upstream traffic behind BitTorrent, just from digitized acknowledgements from subscribers that data has been received.

On an aggregate basis -- both upstream and downstream -- Netflix commands 32.39%. Essentially, during peak hours Netflix is responsible for nearly one-third of all Internet traffic. That massive total is hurting pay TV. A Nielsen study found that streaming-video subscribers watch less TV than those without streaming-video services; 20% less in the marketing-favored 18-49-year-old demographic.

Amazon has a reason to be optimistic
On the surface, it would seem Amazon has nothing to be proud of here: Amazon Video reported a minute 2.14% of peak traffic, a minuscule percentage compared to Netflix. However, when one considers that Amazon doubled its traffic share in the past 18 months and just established itself as the second-largest paid streaming video service in North America by outperforming Hulu Plus, this is an encouraging sign.

Amazon could benefit from internal synergies. Where Netflix's proposition statement and monetization modus operandi is simply streaming videos and DVDs, Amazon has traditionally used its streaming video offerings as a way to induce consumers to subscribe to its Amazon Prime service, although not every Prime member utilizes the video service. And if the reports are correct, it appears Amazon is doubling down on this strategy: The  New York Post recently reported Amazon is set to launch a free, ad-supported streaming service to attack Netflix and to build its Prime membership base. An Amazon spokesperson addressed the report by mentioning the company hasn't announced this service but stopped short of refuting the article; The New York Post hasn't issued a retraction.

Amazon could benefit from higher content prices
A common complaint among analysts is streaming video has been for all intents and purposes a black box. Most providers share very little information on show viewership and popularity, leaving these companies' investors in the dark when it comes to evaluative data. However, Nielsen next month will begin measuring streaming-video services much like the company does for pay-TV. 

Until now, negotiations between streaming sites and studios have been a rather asymmetric affair, with streamers knowing how shows are performing while studios are without data. In the event the data points to individual shows being more popular than studios figure, or if studios find streaming cuts into traditional, ad-based pay-TV revenue, they could ask for higher fees.

If a content bidding war breaks out, Amazon would be in a stronger position than Netflix, with quick assets (current assets minus inventories) of $11.25 billion versus Netflix's $1.8 billion current assets minus content library (a form of inventory). In addition, Amazon's core business of retailing allows the company to produce lower margins without invoking investor ire like pure-play video company Netflix.

That said, with streaming services now in 40% of U.S. households, up from 34% in January, it appears traditional pay TV (and not Netflix) has the most to lose from Amazon's streaming growth. As streaming-based services become more popular, there should be enough subscribers for both companies.