In October 2012,
CEO Reed Hastings announced that he was stepping down from
's board of directors. At the time, there was
that Microsoft would acquire Netflix -- and that Hastings, as an
obvious insider, would need to excuse himself from the
Instead, Microsoft went in another direction entirely,
building its own internal studio and making a big bet on original
, meanwhile, was heading in a similar direction, funding pilots
and working to develop a slate of original content for its
upstart Amazon Prime Instant Video service.
Nearly two years later, Amazon is even more aggressively
betting on original content, while Microsoft has largely
abandoned its original programming ambitions.
Amazon warns of loss
When Amazon reported its second-quarter financial results last
month, shares fell in the wake of disappointing guidance. For the
current quarter,Amazon expects to lose between $410 million and
$810 million, a drastic increase from the third quarter of
Over $100 million of that loss could be attributable to
Amazon's original programming. During the e-commerce king's
earnings call, CFO Tom Szkutak noted that the company would spend
over $100 million developing original video content in the third
quarter, up significantly from the prior year.
Amazon will unveil the fruits of that $100 million later this
month. On Aug. 28, it will debut five new pilots on Prime Instant
Video. If viewers are receptive, some could become new Amazon
original series, joining existing shows such as
Nadella ends Microsoft's content ambitions
Microsoft also had an earnings call in July, but the tone was
quite different. Rather than promise to spend millions on new
original content, CEO Satya Nadella noted the company's decision
to wind down Xbox Entertainment Studios.
Microsoft will continue to work on a handful of programs
already in development, including the much-heralded
television series, but the company has clearly lost its appetite
for original programming.
To be clear, Microsoft still appears to be interested in
television -- but from a technology and hardware standpoint only.
Earlier this month, Microsoft unveiled a digital tuner accessory
for its Xbox One video game console, and at Gamescom the company
announced that TV signals fed into the Xbox could be streamed to
nearby tablets and smartphones. Both features should be quite
useful to TV buffs, but serve to augment existing content rather
than offer new material.
Ultimately, both companies' decisions make sense in the context
of what they are trying to achieve.
Although Microsoft could, perhaps, win over some marginal
buyers by giving its Xbox One a slate of exclusive series, most
people shelling out $399 for the console are likely motivated by
gaming rather than by video content.
Amazon's service, in contrast, exists outside of its hardware
ecosystem -- the Fire TV supplements it, but priced at just $99,
it's in another, much cheaper, league from Microsoft's Xbox.
Amazon has shown that there's demand for Prime Video, and the
growth of the service's content has coincided with an increase in
the number of Prime subscribers. These users, in turn, are
much more likely to purchase physical goods from Amazon (
they tend to spend almost twice as much
Amazon and Microsoft compete on many other fronts -- cloud
computing most notably, as well as tablets. Streaming video is
one area where they will not battle going forward, and it appears
to be a wise decision for both companies.
Leaked: Apple's next smart device (warning, it may
Apple recently recruited a secret-development "dream team" to
guarantee its newest smart device was kept hidden from the
public for as long as possible. But the secret is out, and some
early viewers are claiming its everyday impact could trump the
the iPad. In fact, ABI Research predicts 485 million
of this type of device will be sold per year. But one small
company makes Apple's gadget possible. And its stock
price has nearly unlimited room to run for early in-the-know
investors. To be one of them, and see Apple's newest smart
On TV, Amazon and Microsoft are Headed in
Drastically Different Directions
originally appeared on Fool.com.
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