Simplicity is the key to Netflix's success

Netflix CEO Reed Hastings delivers a keynote address at CES 2016 at The Venetian Las Vegas on January 6, 2016 in Las Vegas, Nevada. Ethan Miller/Getty Images

Finally, Netflix's clear focus is a huge advantage over Amazon and Hulu in the streaming video market. Consumers know what Netflix stands for: commercial-free on-demand streaming for movies and TV series.

By contrast, Prime Instant Video is just a small piece of what Amazon does. Moreover, since Amazon also sells pay-per-view content, it's not always easy to figure out what content is included with Prime, especially in Amazon's TV apps.

As for Hulu, it has an everwidening array of options: a limited menu of free ad-supported content, a subscription service that offers more content but still includes ads, and a pricier ad-free subscription service. Live TV would be just one more complication making it difficult for consumers to understand what Hulu stands for.

Netflix's comparative simplicity — it offers three tiers differentiated by video quality and how many people can watch at once — has helped it build a much stronger brand in streaming video.

As a result, Netflix is on pace to add about 5 million domestic subscribers this year, despite entering the year with nearly 45 million US subscribers. Market saturation is certainly becoming an impediment to faster growth for Netflix's domestic business. Competition from Amazon and Hulu is a much smaller concern.

Adam Levine-Weinberg has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.