How the Streaming Partners Program Affects Netflix and Hulu
A Look at Amazon's Streaming Partners Program
Competitive landscape
It appears that Amazon’s (AMZN) Prime Instant Video service is becoming increasingly competitive with major streaming services like Netflix (NFLX) and Hulu. Amazon has taken several initiatives to expand its Prime Instant Video service.
Amazon is also producing original content and has signed Woody Allen to direct Amazon’s first exclusive television series in 2016. Amazon has also entered into content licensing deals with Viacom (VIAB) and HBO (TWX).
With the launch of its Streaming Partners Program, Amazon is also now offering a live OTT (over-the-top) subscription streaming service. These initiatives can help Amazon gain more subscribers to its Prime program and also earn more revenues in the process. It is possible that other streaming services like Netflix are feeling the pressure from Amazon’s new initiatives.
Netflix’s 3Q15 domestic performance
The performance of Netflix’s domestic business has been a concern for investors. In 3Q15, the company added only 0.88 million members in the United States, compared to Bloomberg’s estimate of 1.3 million and the company’s internal estimate of 1.2 million.
As the chart above indicates, Netflix had 43.2 million members in the US in 3Q15. Netflix’s revenues and margins for its domestic streaming business for the last quarter were in line with its estimates.
Streaming Partners Program
Amazon’s Streaming Partners program offers an OTT (over-the-top) streaming subscription service to premium networks like Starz and Showtime (CBS) at $8.99 per month. It is still less expensive than a Showtime subscription at $10.99 per month, which is available when a user subscribes to Showtime through Google Play (GOOG) or Apple’s (AAPL) iTunes store. It could make Amazon’s Prime Instant Video service attractive to Millennials who have cut the cord on pay-TV.
Hulu also offers Showtime at $8.99 per month in addition to its ad-supported plan priced at $7.99 per month.
Amazon makes up 6.07% of the PowerShares QQQ Trust Series 1 ETF (QQQ). QQQ has a 4.4% exposure to the Television & Radio sector.
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