Netflix (NFLX) Doesn't Want an Enemy in Amazon (AMZN)
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Price: $259.45 -0.71%
Rating Summary:
68 Buy, 7 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 7 | Down: 16 | New: 37
Rating Summary:
68 Buy, 7 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 7 | Down: 16 | New: 37
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Amazon.com Inc (NASDAQ: AMZN) may be getting ready to offer free streaming services to its Prime customers, which would give the users access to 5,000 movies and TV shows.
This could be a blow to Netflix Inc. (NASDAQ: NFLX), which has been pushing its online streaming services recently to continue the company's explosive growth. To this point Netflix has seen little real competition in the space, but the emergence of a viable Amazon service would create obstacles.
According to a posting from Engadget on Monday, an Amazon advertisement popped up saying that the streaming service would be no charge to Prime customers of the online retailer that already pay $79 per year for reduced shipping costs.
This would be an upgrade for many users, as Netflix currently charges $7.99 per month ($95.88 annually).
"It's a giant opportunity, and Amazon and Apple (NASDAQ: AAPL) are the only two guys that have all the elements necessary to effectively compete: access to content, big balance sheets, good technology to deliver content, and some installed customer base they can easily market to," Wedbush analyst Michael Pachter said.
Analysts are also speculating that Amazon may look to partner up with Coinstar Inc. (NASDAQ: CSTR), which owns Redbox kiosks.
Amazon could also look to HBO, which is still available as a content provider, a move that Pachter sees as plausible.
Amazon is enormous compared to Netflix in terms of its $9 billion in cash. Netflix has a total market cap of roughly $11 billion. This creates an enemy for Netflix that it may not be able to tackle.
This could be a blow to Netflix Inc. (NASDAQ: NFLX), which has been pushing its online streaming services recently to continue the company's explosive growth. To this point Netflix has seen little real competition in the space, but the emergence of a viable Amazon service would create obstacles.
According to a posting from Engadget on Monday, an Amazon advertisement popped up saying that the streaming service would be no charge to Prime customers of the online retailer that already pay $79 per year for reduced shipping costs.
This would be an upgrade for many users, as Netflix currently charges $7.99 per month ($95.88 annually).
"It's a giant opportunity, and Amazon and Apple (NASDAQ: AAPL) are the only two guys that have all the elements necessary to effectively compete: access to content, big balance sheets, good technology to deliver content, and some installed customer base they can easily market to," Wedbush analyst Michael Pachter said.
Analysts are also speculating that Amazon may look to partner up with Coinstar Inc. (NASDAQ: CSTR), which owns Redbox kiosks.
Amazon could also look to HBO, which is still available as a content provider, a move that Pachter sees as plausible.
Amazon is enormous compared to Netflix in terms of its $9 billion in cash. Netflix has a total market cap of roughly $11 billion. This creates an enemy for Netflix that it may not be able to tackle.
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