Netflix adds CBS content as Hulu, Amazon burn... but watch out for Amazon

Jim O'Neil

Netflix scored another win yesterday, announcing it had signed a deal with CBS--the same CBS that has so far refused to make a deal with Hulu--that will give Netflix subscribers streaming access to a lot of library content--some current.

The deal doesn't get Netflix the cream of CBS's TV offerings, but it's not bad, Medium and Flashpoint from recent content, and older series like Frasier, Family Ties, Star Trek, the original Hawaii Five-O, Twin Peaks and The Twilight Zone.

It's got to be a kick in the pants for Hulu, which has content from ABC, NBC and Fox, although NBC--one of its owners along with Disney and News Corp.--also has a content deal with Netflix. CBS chief Les Moonves hasn't been a big fan of online video, and Hulu in particular, at last year's Cable Show saying the problem with online video was "I'm only getting pennies online. If too many people shift to online, I'm not going to be able to produce CSI. That's why we're not on Hulu. And until the model works, we won't be."

In December, Moonves reiterated that the broadcaster would "make (online video) deals when it makes sense," and, he added a nod to Netflix: "Some CEOs think Netflix is the anti-Christ. Others embrace it as the Second Coming. We're somewhere in the middle. Caution is not a bad thing here."

Looks like Moonves has finally decided he had a deal that made sense.

"We are very pleased that the titles offered through this deal will now also be made available to a whole new community through the terrific and convenient service that Netflix offers," said Scott Koondel, president of distribution, CBS Television Distribution. "We will continue to pursue additional non-exclusive distribution partners that are additive to our overall business."

The announcement of the two-year deal with Netflix took some air out of Tuesday's Amazon announcement that it, too, was launching a streaming video business. Its free offering is tied to its Amazon Prime subscription, which gives members unlimited two-day shipping on Amazon purchases for $79 a year. Amazon Prime member have access to about 5,000 movies and TV shows from Amazon, mostly older.

Amazon's play is a little more interesting than Netflix's short-term programming buy, though, and here's why: while Netflix has 20 million subscribers, Amazon sees 60 million visitors to its website each month, millions of whom are Amazon Prime members, ready to buy something with credit card numbers already on file. With the lure of 5,000 easily accessible--and free--pieces of content available for streaming on Amazon Instant Video, is it that much of a stretch to see a portion of those Prime members reaching deeper into Amazon's VOD offering and its 90,000 pieces of content?

Caris & Co. analyst Sandeep Aggarwal sees the Amazon play as a precursor to the company's more aggressive development of its streaming and VOD play.

"In our view, this seems to be both an offensive and defensive move," he said. "On one hand, it brings Amazon into the fast-growing movie streaming business with a value-priced offering, on the other hand, Amazon strengthens the value proposition for its Prime program. We expect a broader roll-out of this offering in the coming quarters."

On Amazon's homepage today, CEO Jeff Bezos makes a big push for the service with a letter to Amazon customers pitching the "brand new benefit" to Amazon Prime, and offering a free, one-month trial.

On the face of it, Amazon's play is about adding members to Amazon Prime, but there's a strong current that may well feed its Instant Video initiative, too. -Jim

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