Big bucks spent to increase a relatively small share.

Last week a report from Sandvine estimated that Netflix’s share of Internet traffic is 33%.  This makes Amazon’s estimated share of 1.8% look relatively insignificant, however, Netflix CEO Reed Hastings is keeping a close eye on the competition.  Hastings recently stated that he estimates Amazon is losing between $500 million and $1 billion a year as it ramps up its content acquisition efforts in hopes of creating a more compelling offering for consumers.  Netflix expects to spend $2.1 billion on content acquisitions over the next 12 months. 

Not only is Amazon ramping up its acquisition efforts, but it is also altering its pricing structure.  Previously, subscription to the Amazon Prime service was offered solely through an annual subscription offering of $79.  However, recently Amazon added a monthly subscription offering available at $8.