4 Major Contenders for Netflix’s Crown

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Netflix streaming videoSummer ended rough for Netflix (NASDAQ:NFLX) and its shareholders. Over the past 12 months, streaming video has become the hottest growth segment in entertainment and Netflix has been the undisputed champion, trouncing its direct competition at the same time as threatening the downloadable video industry, traditional cable and satellite service, and the on-life-support DVD business. Shares jumped from $138 to $304. Its total subscriber ship passed 25 million.

Then Netflix announced that it was effectively doubling subscription fees and spinning off its DVD rental business into a new subsidiary. Then it lost 1 million subscribers during the past two months. Shares are trading around $131 as of this writing. For the first time, there is blood in the streaming video water. Who is ready to gobble up Netflix’s market share and transform the streaming market into a competitive field?

Amazon

Never doubt the cunning of the world’s most famous online retailer. While Amazon (NASDAQ:AMZN) never has become the player in digital media its shareholders would like it to be — consistently losing out to Apple (NASDAQ:AAPL) in downloadable music and video sales — the company has been carefully building its streaming business into a formidable competitor since January.

Amazon gave subscribers to Amazon Prime — a premium subscription service that costs $79 per year and also gives discounts on shipping — access to a library of 5,000 streaming television shows and movies in January. That library grew to 9,000 by August. With a rumored tablet PC coming this fall and other perks like book rentals coming with Amazon Prime, Amazon might be the Netflix replacement to beat.

Blockbuster

It’s back. Again. The original video rental behemoth thought finally dead in the past 12 months is getting yet another lease on life though its new owner Dish Network (NASDAQ:DISH). Dish is planning to transform Blockbuster into a streaming video service to take on Netflix.

Details still are scarce, but a source in a Bloomberg report from earlier this month claims Dish plans to offer on-demand movie rentals of newer movies not typically offered through streaming services like Reed Hastings’ beleaguered titan. Dish’s relatively small audience might limit Blockbuster’s reach, but if its available content speaks to consumers, it stands a good chance of capturing some of Netflix’s lost masses.

Hulu

The streaming video website owned in part by Comcast (NASDAQ:CMCSA), News Corp. (NASDAQ:NWS) and Disney (NYSE:DIS) has played a sad second fiddle to Netflix in the past year. It opened the subscription-based Hulu Plus service in the fall of 2010 and has grown a user base of around 1 million paying subscribers. Slow going. It has stolen some strong content partners from Netflix, but recent restrictions on new television episodes from its owners like News Corp. are among a number of factors limiting its potential.

Hulu’s greatest strength may be as an asset for another company. Rumored buyers include Yahoo (NASDAQ:YHOO), Google (NASDAQ:GOOG), Dish Network and even Apple.

Microsoft

Of all those on the list, Microsoft (NASDAQ:MSFT) is a dark-horse contender for the streaming video championship because its streaming service doesn’t exist yet. The company offers downloadable video rentals and sales through the Zune store, and its Xbox 360 game console was one of the first non-PC devices to offer Netflix streaming, so video is nothing new for its business.

Microsoft is planning to release a brand-new television service through the Xbox 360 this fall, though, and it will offer streaming options found using Bing web searches as well as regular broadcast television. Microsoft also should avoid some of the content partner conflicts that have troubled other streaming video outlets as its service will work in conjunction with cable providers. Rumored partners include Comcast and Verizon (NYSE:VZ).

As of this writing, Anthony John Agnello did not own a position in any of the stocks named here. Follow him on Twitter at @ajohnagnello and become a fan of InvestorPlace on Facebook.


Article printed from InvestorPlace Media, https://investorplace.com/2011/09/netflix-contenders-amazon-blockbuster-hulu-microsoft/.

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