Fire TV. Source: Amazon.
When Amazon.com first launched its Prime Instant Video, it was a subpar offering against Netflix 's powerhouse content. When Netflix introduced its own original programming, though Amazon did the same, that gap widened even further.
But, during the past few months, Amazon launched its Fire TV set-top box, became the exclusive online distributor for HBO content and, this week, added a boatload of new content. All of which have pushed more subscribers in Amazon's direction.
Taking over streaming
According to the research firm Parks Associates, about 50% to 60% of U.S. homes with a connected consumer electronics device (smart TV, set-top box, etc.) have a Netflix subscription. Amazon's Prime service currently takes about 34%. Of course, there's some overlap between Netflix and Prime subscribers.
But while Netflix is the undisputed leader in video streaming right now, Amazon made some big gains during the past few years. Right now, nearly 20% of all U.S. homes with a broadband connection are subscribed to Amazon Prime. And Amazon's new content deal, paired with HBO and the Fire TV, should start pushing that number even higher.
This week, Amazon acquired the streaming rights to Disney Channel programming, MLB.TV, A&E, Lifetime, Dailymotion, and others. The Disney and MLB channels on Fire TV are available now, with the rest coming before the end of the year.
Steve Rabuchin, Amazon's Vice President of its appstore, said in press release that "Customers are loving the selection on their Fire TV, telling us how easy it is to watch their favorite movies and TV shows, listen to music, and play games in their living room. And because of that, developers continue to bring great apps to the platform, with app selection more than doubling since launch."
Let's take a look at that last sentence again. Since the Fire TV launched just four months ago, Amazon has doubled its apps on the Fire TV. Netflix, of course, doesn't have it's own set-top box, so it's not as if we can compare app numbers; but we can safely assume that the new content deals, HBO shows, and more apps are a way of luring customers to Amazon's streaming service.
A Morgan Stanley survey showed that video streaming customers prefer HBO's original programming over Netflix's, even if just a little. So, the combination of Amazon's recent content deal, adding HBO exclusive content, and selling its own Fire TV should be bit unnerving for Netflix.
How Amazon's changing the tide
The annual growth rate for Amazon's service is more than 55% since 2012, while Netflix's is just 16%. Parks Associates' data shows the percentage of connected users with a Netflix subscription hardly changed between 2012 and 2013. By comparison, Amazon Prime subscribers nearly doubled during the same time period.
In May, the research firm said that: "Amazon's growth shows how dynamic the OTT space truly is. While Netflix remains the dominant player, consumers are still open to alternatives with interesting content and business models."
That's exactly what Amazon offers with its Prime Instant Video and its Fire TV set-top box. The data above was published just one month after Fire TV launched, just a few weeks after Amazon made its deal with HBO, and four months before Amazon's most recent content deal. While Netflix has enjoyed the lion's share of streaming, Amazon is growing its subscribers quickly, and seems poised to catch the U.S. home-streaming subscription numbers that Netflix boasts.
Amazon's goal for Prime has always been to get subscribers to buy more goods from its website. But if it continues to follow its current path, it might just become the dominant content-streaming service, as well.
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The article Amazon.com Just Upped Its Game Against Netflix originally appeared on Fool.com.
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Netflix, and Walt Disney. The Motley Fool owns shares of Amazon.com, Netflix, and Walt Disney. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .
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