Amazon Instant Videos Sends Netflix Spiraling (NFLX, AMZN)

Amazon.com (AMZN) announced the launch of a new feature for Amazon Prime members that allows for unlimited, commercial-free instant streaming of thousands of movies and TV shows. From AMZN’s press release:

Millions of Amazon Prime members already enjoy the convenience of free Two-Day Shipping,” said Robbie Schwietzer, vice president of Amazon Prime. “Adding unlimited instant access to thousands of movies and TV shows at no additional cost is a great way to give members even more value for their $79 annual Amazon Prime membership.

This is a clear shot at Netflix (NFLX), which has been offering streaming movies and TV shows since November, 2010. Furthermore, while NFLX currently charges $7.99 per month for this service, AMZN will be offering its service at no additional cost for current Amazon Prime members.

Though some industry watchers, including Peter Kafka of All Things Digital, don’t think AMZN’s foray into streaming media is a NFLX killer, the market seems to think otherwise, sending NFLX down 5.91% during regular trading followed by a further 1.03% decline in after-hours. (Yahoo Finance)

Covestor models that hold NFLX as of end of day 2/22 - click through for more info on the models:

Covestor models that hold AMZN as of end of day 2/22 - click through for more info on the models:

Sources:

“Amazon Starts Up Its Web Video Service. Not a Netflix-Killer, But a Start” Peter Kafka, All Things Digital 02/22/2011. http://mediamemo.allthingsd.com/20110222/amazon-starts-up-its-web-video-service-not-a-netflix-killer-but-a-start/

“Amazon Prime Members Now Get Unlimited, Commercial-Free, Instant Streaming of More Than 5,000 Movies and TV Shows at No Additional Cost” Amazon.com, 02/22/2011. http://netflix.mediaroom.com/index.php?s=43&item=376

“Netflix Launches U.S. Subscription Plan for Streaming Movies & TV Shows Over the Internet for $7.99 a Month” Netflix, 11/22/2010. http://netflix.mediaroom.com/index.php?s=43&item=376