I don’t really agree with the premise that Amazon Instant Video is within striking distance of Netflix, not just because the two services are still so far apart by the only measure that counts — hours streamed — but because consumers use the two so differently.
Yes, you can binge-watch TV shows on Amazon Instant Video — I watched almost an entire season of Rome last weekend while nursing a cold. But the hybrid subscription/pay-per-view Amazon Prime model inhibits you from surfing the catalog and sampling content in a way that racks up significant viewing hours or consumer attachment.
In my mind, consumers turn to Amazon — and to Apple’s iTunes for that matter — when they want to watch a specific movie or TV show, sort of how we used to go to Blockbuster (and now Redbox) for newly released titles. We use Netflix to find something to watch, the way we used to channel surf.
This is what Reed Hastings calls “different use occasions” that make up the spectrum of the home entertainment market. Hastings used this concept to dismiss speculation that Apple would kill Netflix when iTunes began selling movies and TV shows. It sounded like wishful thinking at the time but — he was right.
Anyway, this Motley Fool note contains a lot of interesting stats about streaming that remind me of the adoption curve for online DVD rental: