Netflix once seemed unbeatable, but those days are far behind us.
2007 saw the launch of Netflix’s instant streaming video service, a small perk for subscribers who were already receiving DVDs by mail. Fast forward 5 years, and Netflix streaming subscribers now outnumber DVD-by-mail subscribers by more than 11 million.
That’s one-fourth of all Internet traffic in North America. Not bad for something that started out as a “small perk,” eh?
The explosive success of Netflix’s streaming video service, like all success, inspired plenty of copycats. Last year Amazon introduced a streaming service as part of its Amazon Prime membership, which offers customers other benefits like free shipping and free Kindle ebook rentals.
Amazon Prime Instant Video began with 5,000 titles in its library of TV and movie streaming options, and has expanded to 22,000 titles today. With Amazon’s recent announcement that 3,000 new titles will be added to the collection – titles that were previously exclusive to Netflix – it seems that Amazon has become Netflix’s most powerful competitor.
Expect to see major release like “Iron Man 2,” “True Grit,” and “The Hunger Games” join the Amazon Prime lineup in the near future, which is bound to draw in new subscribers to Amazon’s Prime service. The question is: Is that enough to outstrip Netflix once and for all? Netflix may have lost exclusivity, but it hasn’t lost those titles. Netflix also has a significantly larger content library than Amazon.
Where Amazon really stands to gain is not, as Victor Luckerson writes for TIME, in “exceed[ing] Netflix in scope and quality,” but in “provid[ing] just enough features to make a Prime membership, which is $15 cheaper than a Netflix subscription annually, appealing to customers.” Not only will those customers lead to increased revenue from the streaming service, they are also more likely to stick around and purchase other Amazon products. It would be a major win for the company.
Netflix is currently being saved by its extensive television library, which dwarfs its competitors’, but when cable licensing fees increase the same way Netflix’s film contracts do, Netflix will be in a sticky situation.
Is original programming the answer? That’s what Netflix hopes. “Netflix launched the original mobster drama Lilyhammer earlier this year,” says Luckerson, “and has more high-profile fare on deck for 2013, like Kevin Spacey’s House of Cards and the resurrection of Arrested Development.”
Netflix isn’t the only streaming service to turn to original programming as a long-term strategy - Amazon is now actively soliciting scripts to develop into original shows - but so far they remain ahead of the pack.
