Amazon Looks to Download Consumer Dollars

Discussion
Feb 01, 2006
George Anderson

By George Anderson


A report in Variety says Amazon.com is getting ready to announce a new DVD download service that would allow consumers to buy and download programs and movies while waiting for the physical disk to come in the mail.


While Amazon refused comment on any plans for a download service, at least one analyst thinks the online retailer is “uniquely positioned” to offer such an option to consumers.


In a note to investors reported on by Reuters, Stifel Nicolaus analyst Scott Devitt wrote: “We believe Amazon would have the same capacity to cut deals with the TV and movie content owners as does any of its competitors receiving the associated hype for the opportunity. In our view, Amazon has an amazingly loyal customer base and the company offers several incentives for using its network.”


The Variety report said Amazon was looking to offer the combination download and physical DVD service to generate impulse purchases without cutting into sales of DVDs.


“What they are serving up is a direct companion to the DVD,” said an unidentified senior Hollywood executive. “Everything is being leveraged to sell more DVDs. When you go to a product page on the site, it will say all the variations about how you’d purchase that video — stream, buy or maybe a combination (of options).”


A similar service is reportedly being peddled to movie studios by Comcast. The cable television operator is looking for buy-in to allow consumers to purchase programming through its on-demand service and then receive the content in the mail.


Moderator’s Comment: Where do you see the future of the movie rental and purchase business heading? Does Amazon have a built-in advantage over the likes
of Comcast, Apple Computer and Wal-Mart in this area?

George Anderson – Moderator

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

6 Comments on "Amazon Looks to Download Consumer Dollars"


Sort by:   newest | oldest | most voted
Jeremy Sacker
Guest
Jeremy Sacker
15 years 24 days ago

Every brick and mortar entertainment retailer’s nightmare, and yet another nail in the coffin of physical media. The biggest question raised here is what will the traditional entertainment outlets, such as Best Buy, Wal-Mart, Virgin, etc. do in response?

Mark Lilien
Guest
15 years 24 days ago

Any company listed in the survey (and many not listed) could sell this service. Greater profitability is likely for the companies whose heavy users are younger and most computer-literate. Most entertainment (music and movies) is bought by the young, and any new technology is first adopted by people who are most comfortable with technology. Amazon is certainly more agile than a company like Comcast (phone and cable companies are slow-moving oligopolies yearning to be monopolies). The real question is this: why do the music and movie companies need a middleman to sell their content on-line?

Camille P. Schuster, PhD.
Guest
15 years 24 days ago

If I understand correctly, the premise of the business is that I purchase a DVD and can download it while I wait for the physical DVD to arrive. I’m not a “teenage technie” so this business proposition doesn’t make sense to me. Maybe the “teenage techie” market needs to watch the movie on demand so it would make sense to them.

In terms of being able to offer a downloading service, any one of the companies in the list or any other company could make it work if you satisfy the customers’ value propositions. Apple did by offering the hardware and the delivery system at the same time. If the delivery system is compatible with existing hardware that could be enough to create a successful business.

Warren Thayer
Guest
15 years 24 days ago

In 1967, in a film course I was taking at Boston University, a geek in the class said that someday we’d be watching movies at home, on demand, on a pay-per-view basis. I think he even brought satellites into the equation. Today, I think he was right. Back then, we all laughed and rolled another joint.

Dennis Smith
Guest
Dennis Smith
15 years 24 days ago

The current technology to do this does not allow this concept to be practical unless users are willing to receive a reduced quality version via download. HD movies will run 25 GB and even with compression can not be downloaded conveniently even at cable speeds. Maybe we don’t expect any more than VHS video quality on our iPods, but we watch movies on big screen TVs with surround sound and I just don’t see the appeal in seeing it first in reduced quality.

Mark Hunter
Guest
Mark Hunter
15 years 24 days ago

With Microsoft coming out with a new version of Explorer later this year and the continued growth of high-speed connections, the ability for consumers to download from the web is only going to further erode the brick & mortar rental business. The real pain for them will come when cable and phone companies finally increase their download speeds to those rivaling many Asian countries, such as South Korea. The US is way behind many countries in download speed.

wpDiscuz

Take Our Instant Poll

Which company do you think is most ’’uniquely positioned’’ to take advantage of a DVD download for purchase service?

View Results

Loading ... Loading ...