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Amazon, Viacom Deal Expanded

Read MoreHide Full Article Inc. (AMZN - Free Report) announced an expanded multi-year digital video licensing agreement with Viacom Inc. (VIAB - Free Report) , extending archive of TV shows on its streaming video site, Amazon Prime Instant Video.

Amazon Instant Video is a digital video streaming and download service that lets users rent, buy or subscribe to a range of video content.

The Viacom deal will make Amazon's Prime Instant Video the exclusive online subscription service for streaming popular kids programs such as Bubble Guppies, The Backyardigans, Team Umizoomi, Blue’s Clues and Victorious, along with shows from MTV and COMEDY CENTRAL like Awkward, Tosh.0 and Workaholics. Also, future episodes of Dora the Explorer, SpongeBob SquarePants, Fairly Odd Parents, Fresh Beat Band and more will be available for free.

LOVEFiLM customers in the UK and Germany will also get to watch some of these shows later this summer.Lovefilm is Amazon’s European DVD and streaming movie service, which has almost 2 million subscribers.

Amazon is spending a considerable amount on licensing deals for movies and TV shows to attract more viewers to Prime Instant Video. Over the past 12 months, Amazon has entered into a number of deals with every major Hollywood studio, as well as some of the major cable networks. Recently, Amazon signed a deal with CBS for the exclusive right to stream a new drama, Under the Dome.

Netflix (NFLX - Free Report) had also signed a streaming deal with Viacom,which expired at the end of May. We believe this deal is the latest effort by Amazon to strengthen its position versus Netflix,the leading online video subscription service in the United States. Though the Amazon-Viacom deal is a big blow to Netflix, threatening its leadership in a growing market, Netflix’s Internet video library is estimated to have more than 60,000 titles, far more than Amazon's service.

Currently, Amazon Prime Instant Video offers more than 41,000 movies and shows on Kindle Fire and Fire HD as well as Apple's (AAPL - Free Report) iPad, iPhone and iPod touch. It is also available on Roku set-tops, Microsoft (MSFT - Free Report) Xbox 360s, Sony (SNE - Free Report) PlayStation 3s and the Nintendo Wiis and Wii Us.

Amazon is one of the leading players in an extremely fast-growing market. The online giant is trying to explore new markets to make more money. Recently, the company plans to enter the growing grocery segment, by delivering groceries in 40 U.S. markets, according to Reuters. We believe Amazon's expansion plans into the grocery segment will increase the likelihood of other sales, thereby helping Amazon to increase its revenue base and drive expansion.

Amazon shares currently retain a Zacks Rank #3 (Hold).

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