Netflix, Amazon Shares Slump After Latter Launches Streaming Service
After the online retailer's unlimited streaming began last week, Netflix shares dropped 12% due to worries about the new competition. But Amazon's stock is also down 7%.
Netflix shareholders obviously weren't happy about Amazon.com's move to give away streaming movies and TV shows for free to members of its Prime shipping discount service. But Amazon shareholders don't seem particularly thrilled about the initiative, either.
Since Amazon's announcement a week ago, Netflix shares have slumped 12% on worries that a big, new competitor is suddenly in the business of streaming content to subscribers. But Amazon's stock since then is also down, to the tune of 7%.
On Monday, UBS analyst Brian Pitz lowered his opinion of Amazon stock to "neutral," citing the need for the company to spend lots of money to acquire content in order to beef up its streaming offerings.
His financial estimates for the second half of 2011 might be too high, he said, because "free subscription streaming was not included in guidance."
Meanwhile, analyst Tony Wible of Janney Capital Markets opined that others, like Apple and Google, might also try to undercut Netflix by offering versions of streaming subscription services.
"The new round of players in the landscape may care less about running an entertainment business and more about using media to grow or protect their core businesses," Wible wrote in a research report Monday.
While Netflix, Amazon and others all jockey for a position, those with movies and TV shows to sell are reaping the rewards.
"This dynamic is positive for content owners and a negative for established players like Netflix," Wible wrote.
Another established player is Hulu, which said Monday that it has struck a deal with TEDTalks for 50 videos that are available on demand.
TED (technology, entertainment, design) is a nonprofit "devoted to ideas worth spreading." Some of the TED videos Hulu was pitching Monday included Bill Gates speaking about malaria and mosquitoes, J.J. Abrams talking about his love of mysteries, and David Blaine explaining how he held his breath underwater for a record 17 minutes.