Amazon.com Inc.
(
AMZN
) announced a content licensing agreement deal with NBCUniversal
Cable & New Media Distribution Paramount Pictures, extending
the archive of films currently available on its streaming video
site, Amazon Prime Instant Video. Following the news, Amazon shares
were up 1.88%, while
Netflix
(
NFLX
) shares dropped $1.39% on Friday.
The online retailer has been consistently upgrading and
promoting movies and television shows on its streaming video
service. Amazon has entered into a number of deals this year. It
signed a deal with Viacom in February, Paramount Studios in May and
Metro-Goldwyn-Mayer Studios (MGM) in June, which took the total
number of available videos to more than 18,000.
The latest deal with NBCUniversal will expand Amazon's
already-large selection of movies and TV episodes available to
customers as part of their Prime membership. Amazon said that
hundreds of episodes from TV shows like Parks and Recreation,
Parenthood, Friday Night Lights, Heroes, and Battlestar Galactica
will now be available on Prime. Prime users can now view more than
22,000 movies and TV show episodes on Kindle Fire, or compatible
devices including iPad, Roku, Xbox 360 and PlayStation 3.
We believe that one of the key strategies for Prime Instant
Video remains the expansion of its video archive. Netflix has seen
the benefits of such an expansion in recent times, in spite of its
instituting rate increases. However, Amazon's vast offerings at
discounted rates ($79 per year for Prime shipping service versus
Netflix charges of $95 per year for its streaming video service)
could create a price war in the digital delivery of movies.
Amazon's additional advantage is a steady customer base, since
Prime offers several other advantages (related to online shopping
for example) compared to Netflix.
Amazon is one of the leading players in an extremely
fast-growing market. In the second quarter, Amazon's revenue of
$12.83 billion was better than the guidance and in-line with
consensus expectations. Management attributed the increase in
revenue to the growing consumption of digital content across
different categories because of the advantageous value proposition
Amazon was able to provide to its customers.
However, competition from
eBay Inc.
(
EBAY
),
Apple Inc
(
AAPL
),
Barnes & Noble, Inc.
(
BKS
) and
Google
(
GOOG
) remains strong.
Currently, Amazon has a Zacks #3 Rank, which implies a Hold
rating in the near term.
APPLE INC (AAPL): Free Stock Analysis Report
AMAZON.COM INC (AMZN): Free Stock Analysis
Report
BARNES & NOBLE (BKS): Free Stock Analysis
Report
EBAY INC (EBAY): Free Stock Analysis Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis
Report
NETFLIX INC (NFLX): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research