Netflix Claims Amazon Losing Hundreds of Millions on Streaming Video

By Karla Robinson
November 19, 2012

Amazon is losing between $500 million and $1 billion annually on its streaming service, according to Netflix CEO Reed Hastings.
Netflix and Amazon often compete for content deals, and Hastings’ estimates are based on the value of the content agreements that Amazon has won.
Netflix recently reported that it will spend $2.1 billion on content rights in the coming year. It charges its customers $8 a month for its streaming service.
“He says he thinks Amazon’s costs are split evenly between its U.S. operations and in Europe, where it operates the Lovefilm streaming service,” AllThingsD reports.
“In the U.S., Amazon rents and sells digital movies and TV shows on a one-off basis via its Amazon Instant Video service,” the article continues. “It also offers a large catalog of titles for free to customers who pay $79 a year for its Prime shipping service, and recently began testing an option that lets customers pay $8 a month for Prime; Hastings’ estimate is based on acquisition costs for the Prime/video bundle.”
According to Sandvine, Netflix accounts for 33 percent of Internet traffic, while Amazon sits at just 1.8 percent. Even so, Hastings says, “Amazon is the best competitor we’ve ever faced.”

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