LOS ANGELES – While the war for control of the next generation of broadcasting has been relatively tame to this point it looks as if that is about change as Hulu, Netflix (NASDAQ:NFLX), and Amazon (NASDAQ:AMZN) look set to fight an all-out war for domination. Subscriber counts and video content at all three sites are continuing to grow by leaps and so does the potential rewards. Netflix, which offered about 1,000 movies in 2007, now has thousands and just last week, the company signed a deal with the Weinstein Co. for exclusive rights to its movies starting in 2016 for an estimated cost of $30 million per year.
Meanwhile, Amazon’s Prime service has compiled more than 40,000 titles and Hulu, a joint venture between Comcast (NASDAQ:CMCSA), Disney (NYSE:DIS), and 21st Century Fox (NASDAQ:FOXA), offers current television programs within hours of broadcast and generated close to $ 700 million in revenue last year.
All three services are beginning to offer original content including Netflix’s Emmy-nominated “House of Cards” and its just-announced forthcoming Aziz Ansari stand-up comedy special. According to Nielsen (NYSE:NLSN), the average viewer spent more than eight hours per month streaming video in the first quarter – a 60 percent increase from the year before.
While ad spending up to this point has been tame, that is expected to change. According to Kantar Media, Netflix spent close to $ 160 million on advertising in the twelve months ending in March 2013, with Hulu spending $ 40 million, and Amazon $ 10 million on Prime.
Analysts expect increased competition will push up the pressure to advertise especially as new services come online. Such as Redbox Instant with Verizon (NYSE:VZ) and Wal-Mart’s (NYSE:WMT) Vudu service – Apple (NASDAQ:AAPLE) and Google (NASDAQ:GOOG) won’t be far behind.
Furthermore, Microsoft (NASDAQ:MSFT) is beginning to offer streaming through its Xbox gaming console and YouTube is already offering movies and scores of long-form video channels.
In addition, there are the cable companies who stand to lose as streaming looks to overtake cable television as the preferred form of content delivery. It would appear that the rise of streaming will all but kill off TiVo (NASDAQ:TIVO) as streaming services offer personalized content delivery on a variety of devices, something that Digital Video Recorders just can’t do.