Netflix's CEO Reed Hastings believes that Amazon is losing anywhere from $500 million and $1 billion a year on content licensing costs with its Amazon Prime instant streaming service, which Hastings also says will one day provide real competition to Netflix's own streaming service.
Hastings says that Netflix are aware of Amazon's licensing costs because both companies have recently competed head to head for exclusivity deals. Netflix themselves will spend more than $2.1 billion on licensing costs next year.
Amazon's Prime Instant Streaming service is an all-you-can-eat service that costs $79 per year, which subscribers getting access to over a hundred thousand TV episodes and movies. Subscribers also get free 2-day shipping, and Kindle owners also get access to the Kindle Owners' Lending Library for free book rentals from a library of more than 145,000 titles.
Netflix's service, limited to streaming videos only, has a greater library of content, and costs $7.99 per month, and is compatible with more devices (for example, on Android systems, Amazon's streaming service is only available on its own Kindle range of tablets). In terms of unique titles, analysts currently believe Netflix has twice as many titles as Amazon.
However, recent Internet usage stats show that Netflix usage now accounts for as much as 33% of all net traffic, while Amazon is a fair distance behind at only 1.8%. A recent survey also showed that Amazon's streaming video market share is at 22%, compared to Netflix's commanding 82%.
So while Amazon still has some ways to go before it can offer real competition to Netflix, Hastings says the company isn't resting on its laurels. "Amazon is the best competitor we've ever faced," Hastings noted.
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