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Summary:

Netflix is seeing its first taste of real streaming video competition, as Amazon unveiled a subscription video service linked to its Amazon Prime free, two-day shipping offering. But how many Netflix users will jump ship? According to a recent survey, maybe more than you think.

amazon instant

When Amazon introduced its Prime Instant Videos offering earlier this week, we said Netflix shouldn’t be too worried about having another over-the-top subscription service to compete with. After all, only about 5,000 titles are available through the new Amazon service, and at $79 a year, it’s not that much cheaper than a streaming-only subscription to Netflix. But recent consumer survey data released by research firm The Diffusion Group suggests that Netflix might be more vulnerable than we first thought.

The survey, which was conducted prior to Amazon’s official announcement, found that the vast majority of Netflix subscribers that use its streaming service — a whopping 87.5 percent — also shop online at Amazon.com, and 18 percent are also Amazon Prime subscribers. Outside of those that are already Prime subscribers, the free, two-day shipping service still has pretty high visibility: 43 percent of Netflix subscribers were aware of Amazon Prime, compared to 27 percent of those that shop at Amazon but had never heard of Prime.

But the big question is, how many of those Netflix customers would potentially jump ship due to the availability of free, unlimited streaming at Amazon? The answer is: more than you might think. TDG reports that 36 percent of existing Amazon Prime subscribers said they would cancel Netflix and use Amazon Prime Instant Videos instead. An additional 33 percent said they would keep their Netflix subscription and use both services, with 10 percent saying they would continue only using Netflix. Meanwhile 21.5 percent said they didn’t know how they would use the services.

There are some important caveats to note before taking these results too seriously: First, the survey was completed before the official announcement of the Amazon Prime Instant Videos service, so users were commenting on their intent before they were actually able to see what content was available through the service and on which devices they could access it on. Also, the survey sample is relatively small — just 109 respondents — so there could be a good deal of variability.

Another question asked current Netflix subscribers who aren’t already Amazon Prime customers what their plans would be once the Instant Videos service was launched, again with surprising results. A full 32 percent said they would cancel their Netflix subscription and use Amazon Prime Instant Videos instead. Another 10 percent said they would likely use both services, while 27.5 percent said they would keep Netflix and not subscribe to Amazon’s service. Sight-unseen, and without knowing too much about the Amazon Prime Instant Videos service, more than 30 percent said they didn’t know what they would do.

The sample size on this question is a little bigger (425 respondents), and the results are a little more troubling. After all, nearly a third of respondents said they would cancel Netflix without having too many details about what a competitor actually has to offer. That said, surveys measuring user intent are typically bad at translating into actual user behavior, so the actual results may vary. Even so, with a new competitor in the streaming business, it’s entirely possible that Netflix could see its growth slow or suffer higher churn than before the Amazon service was announced.

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  1. this is indeed far more dramatic than what i think would happen. for more detailed comparison see here http://itvale.com/2011/02/would-amazon%E2%80%99s-rumored-netflix-like-streaming-best-netflix.html/

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  2. For now though there’s still the issue of availability on different eletronic devices and Netflix is way ahead there.

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