Monday, December 06, 2010

Of Course Amazon Will Compete With Netflix

"My main question is, will NFLX's competition adopt their pricing model - the "one price for unlimited streaming" model?  If not, why not? "

Today we got the answer:


Stay tuned.

EDIT:   The WSJ says:

" Inc. is developing a Netflix-like subscription service that would offer TV shows and movies, according to people familiar with the matter. That service would be included as a bundle with its Amazon Prime shipping service, which costs $79 a year, those people said. An Amazon spokesman didn't respond to a request for comment."

I'm an Amazon Prime customer, but this makes zero sense to me.  Combining free 2-day shipping of hard goods with subscription based streaming video packages?  The two go together like oil and water.

Also, it seems like this story probably isn't news at all - that Amazon has always been developing a package to compete with NFLX.  If anyone can make sense of the Prime bundling, please let me know.

EDIT #2:  I have changed my mind and I think this is brilliant.  Offer a streaming subscription for, say, $79 a year (they don't even need to raise the price!) and it comes with free 2 day shipping... This gets customers who might otherwise not be into Amazon's retail order flow to feel like they should order from Amazon because they already get free shipping - while at the same time the streaming subscription undercuts NFLX.  Brilliant, plus it can help them get a critical mass of customers to become important in the imminent content wars.  What's the cost to Amazon?  Bandwidth - which they customers/cable companies/ LVLT/ someone else pays for!  Of course, Amazon needs infrastructure too, but I'm assuming they've been building that out already. 


disclosure: no position in AMZN or NFLX


Blue Moon said...

It makes sense to me because I am too much of a cheapskate to sign up for amazon prime, but probably would if it also included video on demand streamed thru the ol' xbox.

EconomicDisconnect said...

I did a ton of shopping yesterday on Amazon and maybe used your link to get there wink, wink.

Are you a Pats fan or a Jets fan? Does not get bigger than tonight!

Kid Dynamite said...


EconomicDisconnect said...

Nice! I am actually getting nervous over here, usually that does not come unless it is AFC title game/Superbowl time.......

KH said...

Amazon seems to like pushing Prime, in my experience it's a pretty catchy service... This year they gave out a free year of Prime service to anyone with a .edu email address (ie college students). Prime makes it super-easy to do one-click checkout and have a package at my door in 2 business days with anything my heart desires, it really makes it an easy substitute for taking a trip to a B&M store.

Unknown said...

Already have AMZ prime does that mean free streaming now? That would be sweet.

My Ravens shit the bed last night. Did you see how crooked Big Ben's nose was? Hate the dude, but he is tough. That or they gave him some really good stuff at half time.

J said...

They had an easier opportunity with music vs. iTunes and I don't think that got anywhere. Hulu is more in the realm of Netflix's competition, but hey, the more, the merrier.

Kid Dynamite said...

KH - you're preaching to the choir. my wife and I have ordered more than 70 things from AMZN this year.

Brian - we'll wait and see - I'm sure that if they package Prime + streaming they'll hook up existing Prime customers. But this is all speculation at this point.

B - good point on the music downloads - although it's probably a much less lucrative biz.