Did Netflix Break Amazon?

By Douglas A. McIntyre Published Jan 23, 7:30AM EST

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Did Netflix Break Amazon? — © hocus-focus / iStock Unreleased via Getty Images

Netflix did not just beat expectations for the number of subscribers it added in the fourth quarter. It crushed them. The company had forecast it would add 4.5 million. The number turned out to be 7.7 million. That put paid membership worldwide at 231 million. By most measures, that is the highest paid subscriber level of any streaming service worldwide. The increase came at the expense of other companies. Amazon is at the top of that list. Its total subscriber count is estimated to be 200 million.
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One statistic about the streaming business is not good for most streaming companies. The average American has 3.4 services and pays an average of $8.53 monthly. Only two services have massive libraries of movies and TV shows. These are Amazon and Netflix. (Click here for the 25 best original Netflix movies.)
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Why are Amazon and Netflix at the head of the industry? One is that they were early into an industry about a decade old. They got footholds before Disney+, Apple TV+ and several smaller competitors hit the market. Netflix pioneered the market in 2007. Amazon Prime launched around the same time, but it did not have a legacy DVD mail to feed its new business.

Amazon Prime Video had the huge advantage of being bundled with Amazon’s Prime service. It is free, in most senses of the word. Prime members get free shipping, special shopping deals, music and cloud storage. Video is simply another benefit.
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Amazon and Netflix can afford to produce new shows, movies and series with their own money. They spend more than most traditional studios do. While this is a differentiator, since both produce big hits, the library size is critical to subscribers. Many of the videos in these libraries are drawn from other media companies.
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Netflix grew at the expense of another service, or perhaps several. It is unlikely these were the smaller vertical programming ones with limited libraries. This leaves Amazon as its only real competitor. And there is little reason for people to subscribe to both.

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.