Don't be fooled: Hulu and Amazon aren't a threat to Netflix
Thomson Reuters
In the past five years, Netflix has established itself as the No. 1 streaming video service in the US — and around the world. In the domestic market, Amazon.com and Hulu are its biggest competitors.
Amazon and Hulu are both tweaking their business models to draw in more streaming video subscribers. However, their efforts aren't likely to put a dent in Netflix's leadership position.
Amazon creates a stand-alone video option
Amazon InstantFive years ago, Amazon.com launched Prime Instant Video as an additional benefit for its Prime subscribers. Since then, it has rapidly grown its streaming video catalog and used it to sign up more people for Prime.
Indeed, streaming video has been just one of many ancillary services that Amazon has added to the Prime program above and beyond the core free shipping benefit. This has been good for the company, because Prime members tend to spend a lot more money on Amazon.com than non-members. At the same time, subscribers get a ton of value from their Prime subscriptions.
Nevertheless, many pundits have argued that Amazon should offer Prime Instant Video as a stand-alone Netflix rival to target people who aren't interested in the other Prime benefits. Last month, Amazon did just this. Customers can now subscribe to Prime Instant Video for $8.99/month: $1 cheaper than Netflix's most popular plan.
Hulu moves into live TV
HuluMeanwhile, Hulu appears to be wading into the streaming live TV market, joining Dish Network's Sling TV service and Sony's PlayStation Vue. Hulu hopes to launch a streaming "skinny bundle" of live TV channels by early 2017, according to The Wall Street Journal.
This would continue a trend at Hulu to tack on other offerings beyond its bread-and-butter streaming video-on-demand service. For example, last summer, Hulu began selling streaming access to the Showtime premium network as an add-on.
Netflix doesn't mind
Thomson ReutersIt's possible that these new offerings from Amazon and Hulu will be successful on their own terms. Regardless, they have little chance of disrupting Netflix's success.
Amazon's stand-alone Prime Instant Video has a very limited target market: people who don't want to commit to a full year or are too strapped for cash to pay up front. That's because the video-only subscription actually costs more than the full Prime subscription over the course of a year ($107.88 compared to $99)!
Meanwhile, Hulu's live TV service isn't likely to offer much more than the streaming live TV services already available. It will mainly compete with Sling TV and PlayStation Vue as well as traditional cable and satellite TV. Netflix has always positioned itself as a complement to cable TV, not just as a substitute.
More broadly, Netflix believes that multiple streaming video platforms will succeed, as all TV will move to the Internet over time. Since different services offer different content, Netflix expects many people to subscribe to more than one.
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