Amazon Becomes Netflix’s Only Competitor

By Douglas A. McIntyre Updated Jan 11, 4:19PM EST · Published Oct 17, 6:50AM EDT

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Amazon Becomes Netflix’s Only Competitor — © laflor / Getty Images

Netflix Inc. (NASDAQ: NFLX) posted a breathtaking quarter. Revenue reached $4.0 billion, up from $2.9 billion in the year-ago period. The company had 137 million paid subscribers at the end of the quarter, compared with 109 million in the same period the year before.

The only company with the video streaming heft to challenge it is Amazon.com Inc. (NASDAQ: AMZN), which has a paid membership base of over 100 million. Almost all Amazon Prime members are believed to use the company’s streaming media service. And Amazon has and will invest billions of dollars in original programs.

Amazon has an advantage in the heft of its balance sheet and traffic to Amazon.com. Netflix probably has an advantage in streaming revenue. Because the rivals are so much smaller, the market for paid streaming media has become a market of two.

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A small army of competition has started or will start to chase the two leaders. These include Hulu, new services from Walmart and Disney (which recently bought most of the assets of 21st Century Fox), as well as AT&T (which recently bought Time Warner) and Comcast (which owns NBC Universal). All of these are so far behind the leaders in the streaming media sector that they have no chance of catching up. They will spend billions to compete with one another for what eventually will be third place.

Amazon and Netflix have become much more than distributors. Each is a major studio that pushes out dozens of new programs a year. Their subscriber counts and earnings will show whether one takes the lead over the other, but each is already a winner in a business that has become a duopoly.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.