Reed Hastings, CEO of Netflix, has said that while Amazon may be worthy competition in the coming years, right now they are spending more than they are making, by a significant amount.
According to the Netflix CEO, who runs the same sort of streaming service as Amazon do, Amazon have lost around one billion dollars this year on their streaming services.
The amount was tallied by Hastings after looking at where Amazon and Netflix went head-to-head for movie and TV program rights and the value of those content deals. LoveFilm and Amazon Instant Video service are the two streaming services that Amazon provide to European and American markets.
Netflix haven’t been poor spenders either, with the plan to spend $2.1 billion on more content for the streaming service for this year alone. Netflix has a significantly larger userbase to cover these costs, with around 30 million active members on a subscription. LoveFilm has around 2 million members and Amazon Instant Video has less.
Hastings has also changed his mind from an interview in January, where he said that LoveFilm and Amazon shouldn’t be considered competition against Netflix. Hastings said, at the Dow Jones interview a few days ago; “Amazon is the best competitor we’ve ever faced”, a rather step change.
We know that if Jeff Bezos and Amazon are ready to make a product successful, they will wait at least ten years for this to happen. They have done it before with e-books, and now the Kindle range is hugely profitable. We believe Amazon will be ready to throw a lot more money to waste before they abandon the project.
With LoveFilm beating Netflix in Europe on many reviews of content, we believe that Bezos and Amazon are ready to push more money into buying content to truly beat Netflix. With competition like Now TV, which is run by Sky, we wonder if both Netflix and LoveFilm may be a little less likely to succeed in the long run.