Wednesday, September 5, 2012

Netflix, Inc.(NASDAQ:NFLX) facing a new challenge from Amazon.com, Inc.(NASDAQ:AMZN)

Netflix, Inc.(NASDAQ:NFLX) has serious reasons to worry these days.  Amazon.com, Inc.(NASDAQ:AMZN) is all set to challenge Netflix’s position in the market.  The world’s largest online retailer has inked a deal with Epix, a pay TV channel.  The channel will provide movies like “The Hunger Games” on Amazon Prime Instant Video, enhancing Amazon’s ability to take on Netflix.

In comparison to the movies which could be viewed with the Prime Subscription Service when Amazon launched the Kindle Fire tablet, the number now has more than doubled.  This development has affected the Netflix stock which has had the highest fall in six weeks.

The online retailer is likely to unveil a new version of the Kindle Fire this week.  Freebies like a month’s subscription to Amazon Prime which actually costs $79 a year, 2-day shipping service for online purchases and access to streaming videos have also been thrown in.  In fact, Amazon has been expanding streaming videos on its Prime Service, thus providing direct competition to Apple’s iPad and Netflix.

Can NFLX Rebound Now? Find Out here

According to an analyst in New York, “The goal for Amazon with tablets is to keep people in their ecosystem, and that’s what they’ve done by adding more content.” He is also said, “It removes some of the uniqueness of the Netflix content and makes the Amazon offering more competitive.”

Amazon’s agreement with Epix covers movies from the latter’s studio partners – Paramount Pictures, Metro Goldwyn Mayer Pictures and Lions Gate Entertainment Corp. 

However, Reed Hastings, CEO of Netflix had said in July that the company did not expect to be “affected significantly” by Epix running its movies on rival streaming-video services. “Epix is not a particularly large source of total viewing,” he had said after the announcement of the company’s second quarter results. In 2010, Netflix had announced a partnership with Epix.

Shares of NFLX slumped 6.35% to $55.93 on Tuesday.

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