Why Amazon's standalone video service isn't a 'Netflix killer' - and Hulu isn't either

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Netflix Founder and CEO Reed Hastings

On Sunday, Amazon began to offer Prime Video as a standalone streaming service for the first time, bringing it closer in concept to the likes of Netflix and Hulu.

Prior to Sunday, to get Prime Video you had to subscribe to the entire Prime bundle, which included things like two-day shipping and access to Amazon's music streaming service. Setting aside the fact that at $8.99 per month, Prime Video is a bad deal, there's another reason why it's not a "Netflix killer."

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If you look at the overlap of users on the iOS apps for Netflix, Amazon Video, and Hulu, it suggests that the latter two services are complements for Netflix rather than head-to-head competitors.

First, let's look at the overlap graph for Netflix (courtesy of SurveyMonkey Intelligence):

SurveyMonkey Intelligence

These numbers suggest that a substantial amount of Netflix subscribers don't subscribe to Hulu or Amazon Prime, which makes sense given the scale of its US subscriber base (Netflix had 46 million US subscribers at the end Q4 2015, versus Hulu's last-released 9 million subscribers as of April, 2015).

And if these kinds of percentages also held true for Hulu and Amazon Prime - if we observed that subscribers to those streaming services largely don't subscribe to Netflix - it would paint a picture of a zero-sum ecosystem where the three companies are fighting to become the single streaming service you choose (albeit with Hulu and Prime being much smaller). You pick the one service that best suits your needs, and call it a day.

That's simply not the case.

Here is is a graph of Amazon Video's user overlap:

SurveyMonkey Intelligence

And Hulu's:

SurveyMonkey Intelligence

Here you can see that a huge portion of the user base of these apps also use Netflix: 53% for Hulu and 62% for Amazon Video.

While Netflix has won the battle for one-service users, that likely isn't the market that Hulu or Amazon are betting on.

The high rate of overlap suggests that Hulu and Amazon's subscribers are people who have begun to buy into a streaming future. This is a future where you create your own entertainment bundle via a mixture of standalone streaming services.

And in that world, Prime Video isn't a dark horse "Netflix killer," it's just one more channel of content.

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