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Study: Amazon Is Nibbling Netflix's Lunch

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When Amazon launched its Prime instant streaming video service, the company was expected to encroach on Netflix's territory.

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This is significant for a number of reasons. First, iTunes is the only service that does not have a recurring monthly fee (customers pay as they go). Second, iTunes is the only service that does not have an option for unlimited streaming. In fact, iTunes does not stream content at all -- it downloads paid rentals to the user's device and removes them when they expire.

Third, iTunes is the only service that allows consumers to purchase content. While Netflix is a place for temporary rentals (most movies come and go), iTunes users can permanently obtain film and TV show downloads. This indicates that consumers still value ownership, whether it's in the form of a DVD or a digital download.

Fourth, iTunes offers downloadable content that users cannot get anywhere else. For example, only the four most recent episodes of select CBS (NYSE:CBS) dramas and comedies are available to watch on Comcast (NASDAQ:CMCSA) On Demand. But iTunes sells all of them, allowing users to catch up for a relatively small fee. They can also choose to purchase individual episodes, a benefit not available on DVD.

Editor's Note: This content was originally published on Benzinga.com by Louis Bedigian.

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Twitter: @Benzinga

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No positions in stocks mentioned.

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