This Could Send AMZN Stock Soaring
Amazon.com, Inc. (NASDAQ:AMZN) has seen its stock price surge this year, but this latest wave of success could be just the beginning for the e-commerce giant. AMZN stock was given a significant boost as reports emerged that “Amazon Prime Instant Videos” subscribers will soon have the option to add other video packages to their existing suscriptions.
Could Amazon.com be the company to finally blend cable TV and streaming online video?
Amazon.com, Inc.: Braced to Soar
Far be it from Amazon to remain complacent in being the e-commerce site in the world, it has now entered into a new direction and one that could have significant and positive effects on the AMZN stock price forecast. This new development has, in fact, been a long time in the making and could lie at the forefront of Amazon’s ambitious strategy to take a bigger market share than the one it already enjoys.
Amazon’s blossoming new video streaming platform appears to be expanding more aggressively into the online video market, transitioning from the narrow models used by competitors such as Netflix and Hulu to something which more resembles a traditional cable TV platform. (Source: “Amazon Said Planning to Add Other Online Networks to Prime Video,” Bloomberg, November 25, 2015.)
The big difference is that it will be in online form and subscribers will have the option to customize their packages on a level previously unheard of for TV users. Subscribers of Amazon Prime Instant Video will be seeing the landing pages of other video services in the Amazon platform.
The exact services that have decided to partner with Amazon in this new initiative is unclear as of yet, but there will likely be a clear division between those videos offered by Prime and those by other companies. Amazon will also reportedly be allowing subscribers to directly log into the pages of competing streaming platforms via the Prime platform. (Source: “Amazon will reportedly soon add other online services to Prime Instant Video,” The Verge, November 25, 2015.)
So what does his mean for Amazon shareholders?
Ever the trailblazer, Amazon looks to be attempting to blend the concept of a cable TV package with the ease and convenience of Internet streaming. Rather than working against competitors, Amazon will be working with them, integrating their services into its own streaming application.
This is where things will get tricky for Amazon’s competitors and its business strategy may end up looking a bit counterintuitive in the short-term. By partnering up with Amazon, rival companies may stand to lose some revenue flow compared to direct subscription, but what they do gain is access to a far larger market through Amazon.
Amazon is the second-largest Internet video streaming company in the U.S., right behind Netflix. What this proposed partnership offers for traditional movie and TV networks is an avenue through which to appeal to younger, more Web-based consumers, while giving new life to slumping cable subscriptions. Younger users have shown an increasing disinterest in cable TV, favoring on-demand services like Amazon Prime, Netflix, and Hulu instead. (Source: “Amazon Prime will reportedly offer access to other video services,” ENGadget, November 25, 2015.)
The Bottom Line on AMZN Stock
It’s difficult to say with any real certainty which direction the online streaming video business will go. However, shrewd investors will be paying careful attention. Amazon’s stock price could soar if the company’s efforts to expand in this realm continue on their current course.
Despite the lingering questions over the long-term survivability of cable TV, Amazon’s latest initiative seems to provide a solid plan for allowing cable TV networks to transition into the Web-based realm. If Amazon can successfully concentrate on expanding partnerships with these broadcasting companies, it could very well assure the future longevity of AMZN’s stock price.