Amazon shares rise after move on Netflix
Wall Street loves Jeff Bezos’ chutzpah.
Shares of Bezos’ Amazon popped 1.5 percent in early Monday trading, hours after the e-commerce giant announced it was taking direct aim at Netflix by offering a standalone, pay-by-the-month video streaming service.
Called Prime Video, the service costs $8.99 a month — or $1 less than Netflix will cost after a May price increase.
Netflix shares slumped 2 percent, to $109.30, in Monday morning trading.
Prime Video is the first time Amazon offered a video streaming-only service. Before, it was included in the $99-a-year Prime service, which also included free two-day shipping and a music-streaming service.
Wall Street analysts see the move as a big problem for Netflix, which reports its latest quarterly earnings after the bell on Monday.
RBC’s Mark Mahaney told investors in a note Monday that only Amazon would have access to 4K Ultra content at a price less than $10 per month.
Netflix offers Ultra HD content for $11.99, he said.
Another difference, according to Mahaney, is that Amazon lets users download content for offline viewing at a later date.
“We view this move by Amazon as a significant negative development for Netflix,” he added. “There will be extra pressure on Netflix to execute well on its pending price increase.”
However, Mahaney says Netflix has been a tough competitor for all other contenders in the streaming space and notes its huge domestic subscriber numbers, which stand at 45 million. Amazon Prime has an estimated 54 million members, according to analysts, but not all of them are watching video content.
Amazon’s service has been gaining momentum, too. The company spent millions acquiring content at the Sundance Film Festival and the Cannes Film Festival lineup next month — including five movies that Amazon has rights to stream.
The Amazon-backed Woody Allen movie “Cafe Society” will open the festival, representing the first time non-theatrical movies have opened the event.
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