Amazon's ambitions in the digital content business are moving further into Netflix territory, as Netflix battles growing content costs. Bobbi Rebell reports.
Netflix is in the hot seat, and it now faces an increasingly aggressive rival in Amazon. The online retailer's decision to spend more to go deeper into the content business, with Amazon Original Movies, creating an uneven battlefield for Netflix, according to MediaTech Capital Partners' Porter Bibb: SOUNDBITE: PORTER BIBB, MANAGING PARTNER, MEDIATECH CAPITAL PARTNERS (ENGLISH) SAYING: "They still have over 40 million subscribers paying anywhere between eight and 12 dollars a month around the world, and you can't slight that. But Amazon has a different motive. They are really giving you movies and television shows as a kind of bonus to the Amazon Prime offerings of free shipping and other discounts throughout the whole ecosystem that Amazon works in e-commerce." That ecosystem drives revenue for Amazon. It, at least, provides some buffer from critics over its lack of profitability. Amazon spent about $2 billion on content last year, according to Wedbush Securities. Netflix is also spending big on content. Its TV series, "Marco Polo," at $90 million dollars, was widely considered a critical flop. The company does not release viewer data. For Netflix the best move may be to team up: SOUNDBITE: PORTER BIBB, MANAGING PARTNER, MEDIATECH CAPITAL PARTNERS (ENGLISH) SAYING: "Their market cap is huge right now, and it's not going to go down anytime soon, but one option that is out there - Yahoo needs a business model. Once they divest the rest of the Alibaba shares that are propping the Yahoo price up, they could combine with Netflix and actually have a real business. There are others out there, it's not impossible that Alibaba itself might buy Netflix because they are looking for a franchise in the United States." Benefitting both companies - proof that streaming can bring in big dollars - thanks to the unplanned successful early streaming release of Sony's "The Interview."