Do The On-Demand Streaming Giants Complement Each Other?

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The on-demand streaming space is increasingly getting crowded. While Netflix (NASDAQ:NFLX) is the market leader with a 50 million+ strong user base, Amazon Prime Video is making in-roads among viewers with its huge content budget. Social media players such as Facebook and Twitter are also looking to stream live sports and other major events. Google’s YouTube Red is another player which offers subscription based ad-free viewing. While it appears that these on-demand video players are competing fiercely with each other for subscribers, many consumers are opting for more than one subscription for a wider variety of viewing options. Experts believe that Amazon Prime might not be a significant threat to Netflix, since there is significant overlap among users of both services.

Overlap Between Users Indicates Services Are Complementary

According to 2016 research by Futuresource, there is high overlap between Netflix and other on demand services, especially Amazon Prime in the U.S., U.K. and Germany. Nearly half of Netflix subscribers also use Amazon Prime Video in the U.K. and the U.S., and 30% of total respondents to the research group’s survey use both Amazon Prime Video and Netflix. The subscription charges for these services – around $10 a month, which is modest relative to many cable subscriptions – make it easier for consumers to subscribe to multiple streaming services in order to increase the variety of content. Accordingly, many of Netflix’s customers view other players as complementary service rather than an alternative to Netflix.

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Differentiated Content Allows Several Players To Thrive

With Facebook looking to increase its presence in the streaming market, there were fears that it could ultimately become a competitor for Netflix. However, Netflix’s CEO Reed Hastings mentioned recently that the two companies  are not currently competing in terms of content overlap. While Facebook has big video ambitions, the company is currently looking at live sporting events and creating a social experience around them to attract viewers. It is also working with publishers on its platform to increase video content, but has not yet committed huge funds for creating original content like Netflix.  Every player in the streaming segment appears to have a slightly differentiated content strategy, increasing the options for viewers and making these services complementary to each other.

The success of Amazon Prime Video was initially viewed as a threat to Netflix. However, the subscriber growth for both services, as well as the subscriber overlap, indicates that many customers are choosing to use both services rather than pitting them up against one another. Given the fairly affordable subscription costs and variety of content available on various streaming services, it appears that the overlap of subscribers will continue in the near term.

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