Is Netflix Success a Threat to Amazon?

By Douglas A. McIntyre Published Oct 18, 7:10AM EDT

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Netflix Inc.’s (NASDAQ: NFLX | NFLX Price Prediction) blowout quarterly results suggest it is dominating its rivals.
Cutting into Amazon.com Inc.’s (NASDAQ: AMZN) Prime Video success could hurt its overall revenue.
Also: Discover the Next Nvidia.

Netflix Inc. (NASDAQ: NFLX) had a blowout quarter. Global subscribers rose to 283 million from 247 million in the same quarter the year before. Revenue rose 15% to $9.8 billion. Per-share earnings rose from $3.73 to $5.40. The question is whether this level of growth threatens its competitors because many households have only a few streaming subscriptions. Among the most likely candidates threatened by the success is Amazon.com Inc. (NASDAQ: AMZN) Prime Video, which has just over 200 million subscribers.

Most Americans have three or four paid streaming services, depending on which research experts use. Last year, Deloitte estimated four paid per household. Many services are competing for that real estate. Among the larger ones are Disney+, Hulu, Max (formerly HBO Max), Paramount+, and Peacock. Apple TV+ is much smaller, but the Apple Inc. (NASDAQ: AAPL) financial war chest means it can take years to build its service. It also has over 2 billion hardware devices to which it can market.

Amazon does not break out of its streaming service revenue. It is included in its North American e-commerce figures. Amazon offers video as part of its broader Prime membership, including free shipping and special discounts. A full Prime membership costs $14.99 a month. People can get Amazon Prime Video alone for $8.99. Amazon sometimes puts advertising in the video. For an additional $2.99, the content is ad-free.

Outsiders do not know how vital Prime Video is to selling Prime memberships. Some data shows that Prime members spend more on Amazon than people who do not have the service.

Does Netflix cut into Amazon’s Prime revenue? If so, it threatens more than Amazon’s streaming business.

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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.