Amazon looks well-positioned to be a viable Netflix competitor. Sanford C. Bernstein estimates there are at least 25 million domestic Prime subscribers, compared with Netflix's 34 million domestic paid members at the end of the first quarter. With a bit of marketing, Amazon can likely get more of its Prime members to wake up to the streaming service and prevent a few of them from becoming new Netflix subscribers.
And Amazon certainly has flexiblity to spend more. Michael Nathanson of MoffettNathanson estimates Amazon is paying up to $300 million for the content over three years. That's not a huge amount for a company expected to generate $90 billion in sales in 2014. Amazon investors never seem to mind how profitable the company is; the shares have soared in recent years while the company generated minimal operating income.
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That doesn't necessarily mean Netflix will be squeezed out. While the company has a whopping $7.1 billion in streaming content obligations and generates almost no free cash flow, it could probably borrow more money to fund content deals. Indeed, Netflix borrowed $400 million through a 5.75 percent bond offering in February without anyone blinking an eye.
Clearly, Netflix could wind up paying more in future content deals if Amazon is also a bidder. And investors will likely start paying attention to content costs if Netflix's subscriber growth sputters.
But the bigger impact of Amazon getting serious about content is the potential for content owners to receive higher prices. HBO itself appears to have struck a smart deal, given its programs won't go to Amazon for three years after airing and will remain on the HBO GO platform that current subscribers already use. Some consumers who watch HBO shows on Amazon may even wind up subscribing to HBO as a result.
There are plenty of other media companies that could also make deals. Starz, for instance, previously had a deal with Netflix but hasn't yet found a new partner. It has digital rights to movies from both Sony and Walt Disney (until those go to Netflix in a couple of years) and owns some of its originals like "Spartacus" and "Black Sails."
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Others have already sold a fair number of titles but could have more in the pipeline soon. While CBS' Showtime has already licensed shows like "Dexter" and "The Borgias" to streaming on-demand services, others like "House of Lies" and "Ray Donovan" haven't yet been licensed.
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The major film studios already have deals for the next several years, but they could also make special carve outs. Comcast's NBCUniversal, which owns CNBC, wound up keeping "Despicable Me 2" for itself. Universal Pictures has a deal to give movies to HBO for the next several years, but the home entertainment company passed on that particular film.
Demand for original series could also get another boost. Big-budget projects like Netflix's "House of Cards" could become more common with Amazon in the room.
Amazon's reputation for wrecking retailers is rooted in its steep discounting. But big content investments are far less likely to get the media industry in a similar tizzy.
—By CNBC's John Jannarone.