Amazon vs. Netflix - The Battle for Content Has Begun

Netflix (opens in new tab) clearly has the lead in streaming content services. With a head start measured in years and a rousing stable of content in both movies and television, it has become the go-to provider for both mobile video via tablets/phones, set-top boxes and Smart TVs. Amazon (opens in new tab) Prime Instant Video is focused on catching up and has gained much traction in building up its library over the past few quarters. Unfortunately, there is a problem brewing for both services concerning exclusives, and it could leave consumers, with one hand on their mobile device and one hand on their hip, making hard choices concerning which provider to go with. 

Last year negotiations began between Netflix and A&E, the popular cable network with a wide variety of content including "Pawn Stars", "Hoarders", "American Pickers", "Dance Moms" and "Storage Wars". The skewed reality shows may not be everyone’s cup of tea, but there is no denying the enduring popularity of many of its shows. With more than 800 hours of content, shows from the A&E Network became a popular staple on Netflix. That is, until they vanished. Many of the deals for the individual shows expired and needed to be renewed, causing A&E and Netflix to sit back down at the table for a new contract. Netflix was now reportedly seeking to have the shows become Netflix exclusives, essentially barring them from appearing on competing streaming services. A&E reportedly did not want to go down that road. Negotiations fell through, and the shows were dropped.

That is, until Amazon picked them up. Amazon Prime Instant Video negotiations must have gone better, because a new contract was arranged to provide A&E programming on Amazon. In fact, Amazon is now one of the only places you can stream the popular A&E shows. But it doesn't stop there. A similar scenario also played out recently with the pay cable channel Epix. Epix had an exclusivity deal with Netflix, meaning movies such as "The Transformers", "Hunger Games", "Paranormal Activity" and "The Avengers" were only streamed on Netflix. Only this time it panned out better, because when it came to renegotiation, Netflix did not hold on to the exclusive option, and Amazon was able to come in and work out a deal for Epix movies to stream on Amazon Prime Instant Video. However contract negotiations are coming up for Netflix and Epix again this year and in 2014, so the exclusive option could still be on the table. 

Between Amazon and Netflix, as well as emerging new streaming services coming from Redbox and Verizon, and contenders such as Hulu Plus, one thing is clear: Exclusives are the key to winning. Amazon recently announced that its video service has purchased exclusive streaming rights to "Downton Abbey", which goes into effect later this year. Without question, "Downton Abbey" is one of the most popular shows out now, and it is certain now that Amazon has locked it down. If you want to watch "Downton" via a streaming service, you’re going to need to do it on Amazon Prime Instant Video. What is problematic is that Amazon may be available on fewer devices than Netflix, because it is a bit newer. Making strides via mobile devices such as iPads/iPad minis/iPhones and Kindle Fires, and appearing on entertainment devices such as Sony’s Playstation 3, Xbox 360 and Wii/Wii U, as well as on Smart TVs, Amazon is frantically playing catchup, but on the whole making speedy process on where you can watch Prime content. 

But as Amazon and Netflix and numerous other streaming services ramp up, fragmentation will cement the fact that no streaming service will be best. Instead of a race to provide the best user experience and wide breadth of content, it will more likely be a race to nab exclusive content. Amazon just announced that the new CBS Stephen King drama series Under the Dome will be an exclusive for it; they are also giving subscribers in-season access to the whole series. Although Amazon is gung-ho on acquisitions, Netflix is hitting back with a different tactic. Rather than try to wrestle exclusives toward it, it’ll just produce its own exclusives, such as the recent "House of Cards" starring Kevin Spacey. If Netflix can start producing its own hit shows, like HBO has produced "Girls", "Boardwalk Empire", "Game of Thrones", "The Sopranos", "True Blood", "Curb Your Enthusiasm" and many others, it will have to worry less about competing for exclusives. In the end, however it means we may all have to subscribe to several streaming services instead of just the one that has the best selection. That may not be too bad of an idea, because one streaming services is less than the cost of one pay channel on cable or satellite TV. But the fact remains that the scope will most likely go beyond Netflix, Amazon, Verizon and Redbox, there could be double or triple the amount of streaming service players in a year or two, ensuring that no one service will lead the pack as the best or most comprehensive. 

The Amazon vs. Netflix race will be interesting to watch, and it does give consumers a choice, both on their mobile devices and home TVs. And it would not be unheard of, although unlikely, for some of these streaming networks to merge with others. But it's truly a land grab to gain audience share and Amazon and Netflix, and others, will be battling hard and fast in the coming 12 months.