Streaming services from Netflix, Inc. (NASDAQ:NFLX) alone are now part of over 50 million American households, according to information from the last quarter. When compared to the competition, Hulu and Amazon.com, Inc. (NASDAQ:AMZN) subscription base pale in comparison. Just looking at the numbers by themselves, Hulu has less than 15 million subscribers and estimates show that only about 17 million Amazon Prime subscribers are streaming video content.
But investors still seem to be worried but if you look beyond the numbers, that worry could quickly subside. Both competitors of Netflix are beefing up their content. This is both from an original series stand point as well as licensed content in order to bring more market share to their platforms. Investors may be worried, initially by this but sentiment actually remains positive for Netflix. The simple reason for this is that Hulu and Amazon services are less of a direct competition and more of a complimentary offering.
If you look into this a bit deeper, you’ll notice that the number of households subscribing to just one streaming service are declining while households subscribing to multiple streaming services are gradually increasing. If you look at last year compared to this year when it comes to this metric, 2017 has grown to 38% of households subscribing to more than one streaming service. This is compared to 26% last year. One key trend that was observed in this survey was that unlike Netflix, Hulu and Amazon are not necessarily used as singular options as only 6% of households are subscribing to Hulu or Amazon while not subscribing to Netflix.
To the benefit of Netflix, a more first-to–market familiarity hasn’t hurt the company but Netflix has also benefited from its cost structure. The company has a very low “cost to switch” platform. If you look at traditional paid TV services, these companies lock in their subscribers but Netflix allows for cancellation at any time. With growing numbers of people “cutting the cord”, Netflix has continued to increase its content, spending billions on licensed content rights. This isn’t on a national scale but on a global level. In fact, many of its original productions are now in house to create real intellectual property for the company. When compared to others, this is what has continued to help the company stay current and keep attracting new subscribers each month.