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Analyst Says Amazon Prime Video Should Transition to Standalone Streaming Service

20 Jan, 2016 By: Erik Gruenwedel

With Amazon Prime Video securing two Golden Globe wins with “Mozart in the Jungle,” in addition to rivaling Netflix and Hulu Plus on content spending, the e-commerce giant’s subscription streaming service is primed to operate as a standalone service, according to Wedbush Securities media analyst Michael Pachter.

Priced about $20 less a year than a standard HD ($119) Netflix subscription, Prime Video over the years absorbed the former LoveFilm Instant to emerge as more than a value-add to Amazon’s free two-day shipping membership program. Buttressed by exclusive license deals with HBO (for catalog programs) and Epix, Prime Video — unlike Netflix until recently — has maintained ownership of its original programming.

“We have long believed that Netflix’s content was vastly superior to Amazon’s, but the recent termination of Netflix’s Epix partnership, coupled with Amazon’s exclusive license from HBO, makes us believe that consumers may begin to appreciate that the Amazon offering is competitive,” Pachter wrote in a Jan. 20 note.

Indeed, the analyst believes Prime Video’s superior movie slate to Netflix underscores the fact the latter’s pay-TV deal with Disney only includes new movies. Catalog titles domestically are still under the control of Starz for a few years.

With Netflix entering movie productions via Beasts of No Nation, Adam Sandler’s The Ridiculous 6 and upcoming Pee-wee's Big Holiday, the SVOD leader aims to interrupt the theatrical window with simultaneous box office/streaming access. But that could take a few years to resonate with consumers, while giving subscribers the impression that there is limited movie content available on Netflix, according to Pachter.

“It appears to us that the time is right for Amazon to compete aggressively, and we believe that an Amazon standalone subscription streaming service priced below its Prime price would be well timed for a May launch. Should that occur, we believe Netflix shares will be well on their way to our [$45 per share] price target.”

Netflix shares Jan. 20 were down more than 8% in mid-morning trading at around $98 per share.

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