updated 07:14 pm EST, Fri November 16, 2012
Hastings says content acquisitions cost Amazon greatly
Netflix CEO Reed Hastings says that Amazon is spending big in order to catch up to Netflix in terms of video streaming content. In a recent interview, Hastings pegged Amazon's outlay on streaming video content at between $500 million and $1 billion per year. Hastings based his numbers on the value of the content deals Amazon has won when the two companies have gone head to head for exclusives.
Speaking with AllThingsD, Hastings said that Amazon will have to spend heavily in order to truly compete with Netflix in the content streaming market. Recent studies have seen Amazon gradually gaining on Netflix, though Netflix still leads by far in streaming content. In the interview, Hastings described Amazon as "the best competitor we've ever faced."
According to broadband company Sandvine, Netflix streaming is responsible for about 33 percent of Internet traffic, while Amazon accounts for 1.8 percent. in order to draw more users to its streaming service, Amazon recently changed its pricing model to allow customers to pay for Amazon Prime on a monthly basis. The move is expected to draw the two companies into even tougher competition.