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Amazon Strikes Again, Netflix Falls Flat

On Tuesday, Amazon (AMZN) put another foot forward in the streaming video space, striking a key deal with Viacom (VIAB). Amazon made a huge deal to acquire some valuable children's programming, a nice coup as Netflix (NFLX) had recently seen a deal with Viacom end. Today, I'll discuss the deal specifics, and show why Amazon continues to strengthen itself while Netflix falls flat again.


Amazon has brought in a nice chunk of content here, with the excerpt below taken from the above linked press release:

Prime members will now have unlimited instant streaming access to popular kids programming such as Bubble Guppies, The Backyardigans, Team Umizoomi, Blue's Clues and Victorious, along with top-rated shows from MTV and COMEDY CENTRAL like Awkward, Tosh.0 and Workaholics. Prime members will also have access to future episodes of Dora the Explorer, SpongeBob SquarePants, Fairly Odd Parents, Fresh Beat Band and more.

According to Reuters, Amazon agreed to pay more than $200 million for this content package, which would represent the largest check they've written for content. According to Bill Carr, Vice President for digital music and Video at Amazon, kids shows are among the most watched programs on Prime Instant Video. Part of the deal will get key exclusivity for Nick Jr. shows, including "Dora the Explorer," "Go Diego Go!," "Blues Clues," and "The Backyardigans."


Amazon has continued to boost its Prime Instant Video library, which now stands at more than 41,000 titles. You may recently remember Prime hitting a milestone of 40,000 titles. The Prime number could actually be higher than the current figure given, because I don't know if Amazon is including titles they have not received yet. Remember, some of this deal is for future episodes of certain shows.


Amazon struck another key content deal on Tuesday, and this time, it was for content that had been recently dropped by Netflix. It's another shot across the Netflix bow, and you wonder how many more may be coming. Netflix may have the high profile originals to its name, but is it starting to cost the company in terms of its overall selection? I'm curious to see how Netflix spins this in their next quarterly letter and conference call. For now, it appears to be a zero sum game between the two. Content prices will go higher and higher, meaning less packaged content in the end for each. Other names like Redbox Instant aren't helping the fight either. The battle for original content has intensified as well, and both Amazon and Netflix have issued large amounts of debt in the past year. Will they need more funds for content going forward? Only time will tell. Expect the Hulu deal to spark some conversation in the near future as well, but I don't think the price paid will really impact Netflix. The real winner on Tuesday appears to be Viacom, but you have to think that Amazon is celebrating this as well, while Netflix watches more content leave its platform. Maybe subscribers will too as well.
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