Amazon's video streaming service is a threat to retailers - not Netflix

Amazon is doubling down on its video streaming content this year, which seems like a direct strike against Netflix.

But in fact, Amazon's new service could be a bigger threat to retailers.

According to this chart by Cowen & Co., 66% of Prime households are paying Netflix subscribers, with another 10% having access to the service one way or another.

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That means video-streaming may not be a zero-sum game, but rather a market where a mixture of standalone services coexist with each other.

Cowen & Co.

Instead, the real threat may be in the retail space, as Prime members tend to spend more on Amazon.com and less on other competitors.

"Amazon is just creating an incredible moat, because remember, Prime Video and Prime Music are add-ons, it's part of the bundle which is also incredible," Cowen & Co. analyst John Blackledge said in a recent conference call.

The data shows Prime members significantly increase their spending on Amazon the longer they stay a member. According to a recent Morgan Stanley note, about 40% of Amazon Prime members spend over $1,000 a year on Amazon, while only 8% of non-Prime shoppers do so. They also spend about 4.6x more money on Amazon than non-Prime members.

Morgan Stanley

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.