Could the Netflix deal with Comcast spark Amazon to follow suit?

If it’s good for Netflix, is it also good for Amazon Instant Video?

Video thumbnail for youtube video Netflix & Facebook, together at last — for better or worse

This week Netflix was in the spotlight for signing a deal with Comcast to deliver better quality video to home broadband users. And, now it appears that deals with AT&T and Verizon may also be in the works.

Could Amazon.com be next?

I posed this question to Dan Rayburn, a principal analyst with Frost & Sullivan, who is an expert on this issue, and has gotten a lot of attention for writing a heated blog post on the subject Sunday night.

“We don’t know enough details, but my initial guess would be no,” he said, adding that he’s not aware of any deal Amazon may currently have with Comcast.

He says there’s two major reasons why.

First, Amazon does not have the same volume as Netflix — by a long shot. At least one estimate pegs Netflix at hogging 30 percent of all traffic on the Internet. Meanwhile, Wedbush analyst Michael Pachter guesses that Amazon has 10 percent as many streaming customers, who consume 25 percent less, equating to a total of 2.5 percent of Netflix’s volume.

Second, Amazon has its own infrastructure through Amazon Web Services.

To explain this part, you have to know a little bit about how the Internet operates. Companies pay CDNs, or Content Delivery Networks, like Akamai and others, for distributing their content. Amazon operates its own CDN, as do other companies, like Netflix, Microsoft, Yahoo, Apple and Google.

“You’d think anyone who operates their own CDN, would have better insight into what’s going on and how to share traffic,” Rayburn said.

But even though Netflix has its own content delivery network, that didn’t stop it from inking a deal with Comcast. So, really anything is possible.

  • Dumb_Tim_Armstrong

    Agreed. The Great Media Bloodbath of 2014 has begun. The worst won’t be for users of the internet – the worst will be for employees of the companies that are consolidating.
    http://mankabros.com/blogs/onmedea/2013/11/22/the-great-media-bloodbath-of-2014/

  • http://www.christopherbudd.com Christopher Budd

    Me being me, I think there’s another reason Amazon won’t be pushed like Netflix: streaming is at best a side business to them and they have other parts of their business where they can retaliate and cause harm to those media companies (“Gee, it sure would be a shame if searches for NBC programming on DVD started favoring used copies rather than new ones, wouldn’t it?”).

    And anyway, it being a side business to them, Amazon would be willing to tolerate degradation that Netflix can’t.

    I think, sadly, the chief lesson from this is that Netflix is too small and too narrowly focused to survive long-term. I expect that they will end up putting themselves on the block for someone bigger and more diverse to swallow (maybe Amazon?).