July 29, 2011

Amazon Eyeing Netflix After NBCUniversal Deal

A week after signing a deal to stream movies and television programming from CBS, Amazon.com announced Thursday that they had reached a similar agreement with NBCUniversal.

According to Alistair Barr of Reuters, the new partnership between the two firms, which comes amidst rumors that the online retail giant plans to launch a new tablet computer sometime this year, allows Amazon to license approximately 1,000 Universal Pictures films, including Oscar winners such as "Eternal Sunshine of the Spotless Mind," "Elizabeth," and "Gosford Park."

The deal comes on the heels of a $100-plus million deal with CBS Corporation that added 2,000 movies to its Amazon Prime service, which allows members to watch streaming videos and get free two-day shipping on all online purchases for an annual fee of $79.

In total, Barr reports that Amazon Prime will offer 9,000 movies and TV shows following the NBCUniversal deal.

"We are very excited to offer Prime members popular Universal films at no additional cost," Cameron Janes, Director of Amazon Instant Video, said in a statement Thursday. "Our customers love movies and now we offer them more than 2,000 movies to choose from with Prime Instant Video."

The move places Amazon in a position to challenge online video streaming providers Netflix and Hulu, which combined boast over 25 million paid subscribers, according to Bloomberg reports.

"This notches up the competitive bar," Colin Sebastian, an analyst at Robert W. Baird & Co in San Francisco, told the news agency's Zachary Tracer in an interview. "Amazon is incrementally doing these deals with the content providers, and over time we think they will have a compelling alternative to Netflix."

According to Tracer, earlier this week Netflix CEO Reed Hastings penned a letter to shareholder, dismissing Amazon Prime as a threat: "We have vastly more streaming content, are available on more streaming devices and are purely focused on subscription video streaming"¦ So far, we haven't detected an impact on our business from Amazon Prime."

After news of the partnership with NBCUniversal, Amazon's stock rose $1.38 to $223.90 at 4pm EDT, the Bloomberg reporter noted. Conversely, Netflix shares fell $2.80 to $266.62.

"Hulu, a Los Angeles-based Web service that streams TV shows, may be less affected by the Amazon deal because it offers more exclusive content, including recently aired TV shows not available on Netflix or Amazon," Tracer said, citing Janney Montgomery Scott LLC analyst Tony Wible as the source.


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