You might have thought that Netflix was destroying it, what with the service being everywhere and accounting for a sizable portion of evening internet traffic, but it turns out the the company is actually having some trouble. In fact, they are apparently losing $1 billion a year on Instant Streaming, the crown jewel in the Netflix hat.
Of course, Reed Hastings, the CEO of Netflix, doesn’t think that Amazon is doing much better. He estimates, based on the content deals that Netflix was able to eke out, that the company’s less complete offerings are costing them $500 million – $1 billion each year. That difference is made all the more recognizable when you look at the latest usage numbers. Sandvine, a broadband company, reported that Netflix makes up 33% of evening internet traffic. Amazon, on the other hand, made up a mere 1.8%. Though that number is likely to grow.
Hastings further went on to see that while Amazon wasn’t much of a competitor at the moment, they would be in he future. “Amazon is the best competitor we’ve ever faced,” he explained. He sees a future where Netflix and Amazon vie for the title of top streaming company on the internet, something that Amazon has a bit of an advantage with, thanks to their tablets.
Netflix is on track to spend $2.1 billion on content deals this year, a truly massive number. The question at this point is whether the company will be able to offset that price with subscriptions and streaming. An increase in viewership can only help the company, as can its growing catalog of exclusive content.
Netflix isn’t the hot commodity it once was, but it is still a staple of the internet. I’m just hoping the company can claim a few hot content deals. The streaming options seem to be quite stagnant these days.