Should Netflix Start Taking Amazon Seriously?

Netflix is still the undisputed champ among premium video streaming services, but Amazon.com may be starting to gain traction.

Amazon offered up some intriguing metrics for its holiday shopping season recently, but it also included meaty tidbits on its success in taking on Netflix. Amazon has grown its Prime Instant Video library -- the Netflix-like smorgasbord available to Amazon Prime loyalty club members at no additional cost -- from 33,000 movies and TV shows to more than 40,000 titles this year. That's still a far cry from Netflix's growing digital vault, but there's also the issue of variety. 

When it started out a couple of years ago, Amazon's content was simply a sliver of the material that was mostly available on Netflix. That's been changing, especially this year when Netflix and Viacom  parted ways in May. That left young fans of SpongeBob SquarePants, Dora the Explorer, and Blue's Clues having to ask their parents if they could swap out Netflix for Amazon as the exclusive online-only subscription service offering the Nick and Nick Jr. shows. It wasn't just the Viacom deal. There was also Downton Abbey leaving Netflix for PBS exclusivity. 


November saw the debut of Alpha House and Betas, the first two original shows airing only through Amazon's streaming platform. 

In announcing its holiday best-sellers, Amazon revealed the three most popular offerings for Prime Instant Video: Alpha House and the most recent seasons of Downton Abbey and Falling Skies. The first show is an original, while the other two shows are not available on Netflix.

Things could get even more interesting, as Amazon today revealed that 1 million people signed up for its Prime service during the third week of December alone. They naturally agreed to pay $79 a year for the free two-day shipping of Amazon-stocked merchandise, but they will also join the millions of Prime customers who are starting to discover the merits of the growing streaming service.

There's something else to keep an eye on. Amazon may have 40,000 options for customers on Prime Instant Video, but it has another 110,000 digital titles on Amazon Instant Video that customers pay to rent or own. We're talking about newer movies and other content that studios don't want to make freely available, and Netflix just doesn't have a response for folks wanting first-run movies and current-season episodes of shows.  

For now, this isn't a problem. The market is expanding quickly enough for both companies to benefit at the expense of the meandering pay TV titans. However, Amazon's growing viability -- and the access to the pay-per-stream catalog that Netflix has refused to embrace -- could pose challenges down the line to Netflix.

It's going to be an interesting 2014, with more plot twists than we can probably imagine.

It's not just Netflix and Amazon growing at impressive rates
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The article Should Netflix Start Taking Amazon Seriously? originally appeared on Fool.com.

Longtime Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends Amazon.com and Netflix. The Motley Fool owns shares of Amazon.com and Netflix. 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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