Amazon (AMZN) Ends Prime Promotion Early, But Trouble Still May Be Brewing for Netflix (NFLX)
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Price: $79.59 -0.69%
Rating Summary:
57 Buy, 26 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
57 Buy, 26 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Netflix (Nasdaq: NFLX) may still be in trouble even after Amazon.com (Nasdaq: AMZN) cancelled its $7.99 per month Prime promotion after just two weeks.
According to Oppenheimer's Jason Helfstein, the "sticker shock" of an $80 upfront payment is not why consumers are not signing up for the Prime service. Helfstein sees Amazon now re-focusing on faster shipping times and expanded digital content. The latter expectation is a bearish indicator for Netflix, Helfstein contends.
At $7.99 per month, Amazon brought pricing in-line with that of Netflix and Hulu. Consumers are no dummies, however, and many realize that an upfront payment of $80 is equal to about $6.67 per month, markedly lower than the competition.
Helfstein also noted how Amazon inked an expensive content deal with Epix just days before the re-launch of its Kindle Fire tablet in September. The goal, Helfstein notes, was for Amazon to rapidly expand content in aiming to sell more of the Kindle Fire tablets. The Kindle Fire comes with a free month of Prime Instant Video and Prime Kindle Owners' Lending Library...so getting more content ahead of a key product launch was a must for Amazon.
Is Netflix a goner? Probably not anytime soon. Helfstein expects more competition between streaming content providers heading into 2013. The analyst noted that, while large movie deals are limited and have contracts that run 5 years to 7 years, most of the competition will be for TV content.
Shares of Amazon and Netflix are both higher on Tuesday's trading session. Oppenheimer has a Perform rating on Netflix and price target of $80, while rating Amazon at Outperform and price target of $264.
According to Oppenheimer's Jason Helfstein, the "sticker shock" of an $80 upfront payment is not why consumers are not signing up for the Prime service. Helfstein sees Amazon now re-focusing on faster shipping times and expanded digital content. The latter expectation is a bearish indicator for Netflix, Helfstein contends.
At $7.99 per month, Amazon brought pricing in-line with that of Netflix and Hulu. Consumers are no dummies, however, and many realize that an upfront payment of $80 is equal to about $6.67 per month, markedly lower than the competition.
Helfstein also noted how Amazon inked an expensive content deal with Epix just days before the re-launch of its Kindle Fire tablet in September. The goal, Helfstein notes, was for Amazon to rapidly expand content in aiming to sell more of the Kindle Fire tablets. The Kindle Fire comes with a free month of Prime Instant Video and Prime Kindle Owners' Lending Library...so getting more content ahead of a key product launch was a must for Amazon.
Is Netflix a goner? Probably not anytime soon. Helfstein expects more competition between streaming content providers heading into 2013. The analyst noted that, while large movie deals are limited and have contracts that run 5 years to 7 years, most of the competition will be for TV content.
Shares of Amazon and Netflix are both higher on Tuesday's trading session. Oppenheimer has a Perform rating on Netflix and price target of $80, while rating Amazon at Outperform and price target of $264.
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