The battle in the video streaming market is on, and based on recent developments, it will intensify, which ultimately is better for the consumer. As my stock analysis indicates, now is the time to take advantage.
No longer is Netflix, Inc. (NASDAQ/NFLX) safe as the current market leader, but the aggressive moves made by Amazon.com Inc. (NASDAQ/AMZN) to drive its streaming video business is already changing the landscape. (Read “Online War Begins: Netflix vs. Amazon.com.”)
And if you don’t believe me, consider that there is currently a bidding war for video-streaming provider Hulu and its three million subscribers. The company will sell for over $1.0 billion on bids from the likes of private equity AT&T Inc. (NYSE/T) and DIRECTV (NASDAQ/DTV).
My stock analysis suggests that while Hulu is interesting, the company is still largely a U.S.-only business with no international exposure, unlike Netflix and Amazon.com. Hulu is much smaller than Netflix, which has more than 36 million subscribers worldwide (source: Netflix, Inc. web site, last accessed July 10, 2013), and Amazon.com, which has 10 million users. (Source: Thomas, O., “Amazon Has An Estimated 10 Million Members For Its Surprisingly Profitable Prime Club,” Business Insider, March 11, 2013.)
But in the event of a takeover, Hulu will gain access to significant capital, with which it could expand its services to markets within and outside of the U.S. And if the AT&T partnership or DIRECTV bid wins, Hulu will have instant access to tens of millions of subscribers, based on my stock analysis. DIRECTV has about 35 million subscribers in the U.S. and Latin America.
The price points are similar on a monthly basis between the three services, but Amazon.com offers the cheapest annual fee. The emergence of a stronger Hulu would likely increase price competition down the road, and that could drive down the monthly fees.
But according to my stock analysis, what will be the real determinant on which service consumers will base their decision will be program offerings, especially those shows made exclusive to one service. We are already seeing moves by Netflix and Amazon.com to offer proprietary programming, and I expect this strategy to continue—similar to the model set by HBO.
Over the next year, my stock analysis is expected to see the three streaming companies try to align themselves with the makers and distributors of TV shows and movies for more programming deals.
And since there is no commitment to enter into service contracts, consumers can switch services at any time. This will make the competition to retain viewers fierce.
My stock analysis indicates that while Netflix is the market leader right now and is still the company to beat, don’t count out upstart Amazon.com or even Hulu, especially if it aligns with AT&T or DIRECTV.