Amazon Primed to Take on Netflix

Discussion
Oct 11, 2012

Amazon.com is serious about this online video stuff. The e-tailing giant has signed a number of deals with Hollywood studios and last month announced a multi-year deal to purchase streaming movies from Epix, a cable network with partners Metro-Goldwyn-Mayer Pictures, Lionsgate and Paramount Pictures.

The deal with Epix will make roughly 3,000 more movies available through Amazon’s Prime Instant Video, giving further notice that it intends to give rival Netflix a run for its money. Epix and Netflix previously had an exclusive deal, but Amazon moved in when the deal lapsed.

Amazon has been looking to push into video streaming as demand for physical DVDs wane. The company has linked membership to its Prime annual subscription giving members access to streaming content at no additional cost. Consumers who are not Prime members and who purchase a Kindle Fire tablet receive a free one-month trial.

"We are investing hundreds of millions of dollars to expand the Prime Instant Video library for our customers. We have now more than doubled this selection of movies and TV episodes to over 25,000 titles in just under a year," said Bill Carr, vice president of video and music at Amazon, in a statement last month. "We are thrilled to be able to offer our customers such popular Epix titles, many of which were just recently in theaters. We can tell from the data that our customers love watching movies on Prime Instant Video. We think customers will really enjoy watching new titles like The Avengers, Iron Man 2 and The Hunger Games on their Kindle Fire, PlayStation 3, Xbox, iPad or any of the other of the Amazon Instant Video compatible devices."

While the Epix deal gives Amazon some added impetus, a Reuters piece points out that Netflix, with 25 million streaming video subscribers, still has roughly twice as many titles as its rival.

Where do you see the future of video retailing in the U.S. heading? Will Amazon, Netflix and other retailers maintain the market share or will others such as cable operators, movie studios, etc. become the main source for content?

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8 Comments on "Amazon Primed to Take on Netflix"

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Max Goldberg
BrainTrust

Consumers want to watch movies and TV shows on any device, and at any time, and ideally move between devices seamlessly. Retailers that provide this service will be successful, provided that they offer a large selection of titles. Both Amazon and Netflix have large consumer bases. They need to increase the size of their libraries that are available for streaming, with a focus on current hit titles and television shows.

The studios are exploring ways of owning the distribution process. Dish is looking at ways to revive its Blockbuster brand. Cable networks are testing their own services. The marketplace for streaming films and TV shows has yet to declare a winner.

Ken Lonyai
BrainTrust

Amazon has deep pockets that enable it to make big strides in whatever vertical it chooses to buy its way to the top of. However, streaming video is a very segmented business. Don’t count Apple out of the mix — or even a surprise move from Google. Verizon and cable operators have very deep pockets too, so this is one category that is likely never to have a clear and proven leader.

It seems that for all the missteps the studios have made with rights paranoia, that they can stay above the distribution fray and get their royalties from many revenue streams.

Ultimately, I think there will be never-ending brand battles with each content distributor capturing their segment — some battles lost and some won, with constant adjustments to market share. That’s not unlike the auto industry.

Dick Seesel
BrainTrust

Netflix is the “big box store” of video streaming, and I would equate competitors like Apple and Amazon with “warehouse clubs” in the business of selling multiple categories. And Netflix continues to struggle with poor selection of movies and video compared to its bigger, more nimble competitors. If you want to catch up on season 1 of “Homeland,” good luck with Netflix — I am doing my viewing on Amazon Instant Video, and I’m sure they are glad to collect more revenue and data from me.

Ed Dennis
Guest
Ed Dennis
5 years 1 month ago

I have subscribed to both services. I now only subscribe to Amazon because it has better content based upon my taste. Frankly I think this is the future of home entertainment. Streaming entertainment will provide us with viable alternatives to cable or satellite. The cable operators do have the ability to shut everyone else out because of the huge bandwidth available via cable.

Imagine what would happen if cable operators started offering movies for $1.20 like Redbox! Almost all cable operators now offer movies at rental rates of $4.99. If they cut these costs to compete with Redbox they would shut Redbox down and pave they way to make the local cable company the delivery vehicle for all news and entertainment.

The movie studios have the capability of direct delivery over the internet, but need a carrier. The cable guys have a huge advantage right now. However, I can only attribute their failure to act to some legal traffic jam their lawyers have uncovered or the potential of a newer technology on the horizon.

Diana McHenry
Guest

The battle for streaming video is a sign of a bigger battle for retail success. Streaming video can be the online equivalent of creating store traffic. Perhaps while I’m watching Downton Abbey one evening on a business trip, courtesy of my Amazon Prime account, I send my husband a thoughtful item via Amazon. Free shipping too. Amazon is very customer-focused in execution and has the technology infrastructure to build upon.

Apple and Google have great technology and high market capitalization also. In addition to Netflix, what will their next moves be?

Herb Sorensen
BrainTrust
Don’t forget that Apple launched a foray into consumer electronics with the iPod and virtually revolutionized the music business. It’s probably late to do the same thing with movies, since the path is already well known and there are already multiple players in the space. But Amazon has the heft, the vision, and a supporting device, the Kindle, to likely be successful in building this out. Video is of course digital content, and as the “pipes” get bigger, more efficient and lower cost, there will be less and less reason to deliver the content in any way other than over the line. Do movie theaters receive any movies in this way? There doesn’t appear to be any reason they wouldn’t, other than scale issues, which become less and less relevant as time goes by. As I mentioned yesterday in discussing the three components of retail, meeting-of-the-minds (buyer/seller), delivery of the goods and payment, speeding up any one of these will increase sales. The entire electronic delivery of movies business is leveraging this principle — the faster you deliver, the more you will sell. Amazon is already the master seller (meeting of the minds), figuring out what you want to buy… Read more »
James Tenser
BrainTrust

I have one of those flat screen TVs that accesses streaming services. This summer, we checked out the Amazon service using our daughter’s Prime account and were disappointed at the limited range it offered then.

Netflix is more consistently interesting, but it too is kinda thin on classic films. The Marx Brothers are underrepresented, to name one example. And I failed to locate the ’70s cold war classic “Colossus – The Forbin Project” which I’m dying to show to some friends interested in the dark side of Big Data.

So it’s a good thing to learn the Amazon colossus is taking renewed aim at the streaming video sector. I hope the rivalry will prod Netflix to respond with greater selection of its own. Cable’s on-demand services will be forced to compete, and the movie studios will probably figure out how to earn many many nickels by licensing their artistic properties through all these new channels.

Bill Emerson
Guest
Bill Emerson
5 years 1 month ago

No different than the future of books. BlockBuster is already gone. The big question is what are the cable channels going to do to hold onto On Demand movies revenues?

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