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Amazon Talking with Netflix And Blockbuster
Mike from HackingNetflix.com writes "Reuters is reporting that 'Amazon.com has approached online DVD rental service companies, including Blockbuster and Netflix, to explore a partnership rather than launching its own U.S. DVD rental service.'" More from the article: "Despite its online might, shopping giant Amazon faces a potentially expensive battle to crack the competitive U.S. online rental market. The company started its own DVD rental service in Britain in December. Rumors that Amazon would enter the U.S. online DVD rental market sparked a price war late last year between Blockbuster and Netflix, which pioneered online DVD rental and now controls about 75 percent of the market." So there may be a happy ending to this tale for Netflix after all.
Apple is dying, Tivo is dying, BSD is dying, netflix is dying etc etc etc... /me is tired of hearing this kind of nonsense.
Reuters is reporting that 'Amazon.com has approached online DVD rental service companies, including Blockbuster and Netflix, to explore a partnership rather than launching its own U.S. DVD rental service.'" More from the article: "Despite its online might, shopping giant Amazon faces a potentially expensive battle to crack the competitive U.S. online rental market.
Ummm... Does anyone else read that as "we plan to take over your market but might have trouble getting started, so just give us a cut and we'll let you live"?
NetFlix already has a healthy base of customers, and anyone interested in such a service already knows about them. What does Amazon have to bring to the table, other than not crushing them like a bug?
and/or they feel that by entering the market they will further commoditize DVD rental prices, & decrease margins. This could make the business less profitable for all involved. By trying to come up with a partnership, prices could potentially remain higher than otherwise.
within six months. It sort of blows me away that it's not already there. Netflix knows the movies I like much better than Amazon. It knows what I've seen, what I've rented twice. If I wanted to browse some movies to buy I'd go to Netflix and search around, before heading over to Amazon to actually place my order.
I'll bet they'd like a cut of those revenues too.
So close and yet so far from the world's perfect ID number
Not likely. Online video rentals are really about quality vs quantity and that is not Wal-marts forte. Netflix has a large selection of movies but may not always have enough of the most popular ones. Walmart would always have enough copies of popular dvds but would have a limited catalog otherwise. Besides if they were going to break into video rental they would have done it as brick and mortar first.
There's risk from either direction. The attempt to squash them like a bug could also fail, yes, and at ruinous expense? We don't know what terms are being discussed, but there would be concessions and benefits on either side. Not that Amazon isn't dealing from a position of some strength, especially because it can play Netflix off against the Blockbuster evil empire.
Netflix is already facing Blockbuster's recent conversation to their own business model. If I was Netflix negotiating a deal of this sort, I'd be thinking that any sort of Amazon relationship could give me the presence to withstand that. I'd maybe want some sort of mutual benefits situation with respect to DVD sales off of Amazon.
(And I don't know enough about Netflix's base of customers, except that it includes me, but I'd bet Amazon has a colossally higher visibility for the average consumer. Amazon is on the level of google, with more staying power to boot. Whether Netflix has a lot of customers or not, the question is whether there's a lot of growth left in the market, and whether Amazon's presence would get at it.)
"Fundamentalism" isn't about divine morality. It's about human authority.
How great it would be for me to turn on my media center, click Movies, and choose from PPV movies streamed ala Amazon, Netflix, etc. Very cool, assuming the quality was fairly decent and the price was in line with local rentals.
It's not that simple. What Amazon brings to the table is exposure. Amazon is without a doubt the world's largest on-line retailer with the most exposure, and that's something that Netflix can capitalize on. Most retailers or sales oriented companies would give up body parts to partner with Amazon, and that includes some very high profile companies like my previous employer who was the market leader in luxury retail.
Remember the Alamo, and God Bless Texas...
I'm a Netflix fan, but think Amazon should go it alone for no other reason than I love a price war. :)
When Netflix first started, they had a business model where you could rent a single movie, and if you liked it, you could pay the remaining cost of the movie and buy it. It was awesome. I used it all the time.
So why don't they have this anymore? They made a deal with Amazon that Amazon would get the purchase business and Netflix would get the rental business. That way, they wouldn't compete. So Netflix didn't offer that service anymore. Problem was, Amazon didn't offer it either.
Not sure what kind of deal is going to be made, but the sure thing is that it will be bad for the consumer, since it's being done expressly to avoid competition...
Netflix isn't dying...it's in fact the market leader. But it's got some potential competitors who are traditionally "killer competition"
WalMart - kills competitors in markets it enters
Blockbuster - killed off most of the mom & pop rental stores
Amazon - is the dotcom that survived the dot boom/bust
Netflix - is the company that came up with a new business model and grew
However, investor/industry analysts are nervous about it because they don't know if it has staying power. There is strong potential competition (which Netflix has more than held it's own against). And there is the upcoming (for certain eventually just unknown time of arrival) of download on demand.
What Netflix has going for it in the industry.
- established
- market dominance
- market presence
- best interface
So what does Amazon get and offer Netflix. Amazon will save hundreds of millions of dollars. It will also become an "umbrella" of sorts to the investor community who will see an Amazonian partnership as a assurety of long-term livability for Netflix. And guarantee a mutually beneficial symbiotic advertising relationship. Got to Netflix from Amazon, and from Amazon to Netflix.
- The Saj
And, if you think that competing with Walmart on price is a way to stay alive as a business, you deserve what you get as a Walmart customer.
Any pricewar with Walmart is a race to the bottom with Walmart on top. If Netflix did, indeed, match this price, Walmart would offer it at $9.95. Walmart's economy's of scale, ruthless business practices and willingness to leverage gigantic loss-leaders means that you have to compete on things *other* than price when Walmart is involved.
Also keep in mind that in EVERY market segment and local market trading area, there can be only 1 lowest price. Several companies can share that spot, but there is always business being done at much higher prices. Why? Because price is not the only variable in a purchasing decision. In fact, for many consumers, it's not even the most important. Many consumers (myself included) tend to actually AVOID the lowest priced vendor because of the problems that frequently come with choosing them. The psychology of pricing is much more complicated than "Lowest price good. Any higher price bad."
If you do some market research, you'll find that oftentimes, one of the best ways to boost both sales numbers (actually sell more units) and profit per unit simultanously is to *increase* prices.
If you're only competitive advantage is price, you had either better be REALLY good and keep that advantage or you need to watch out for anyone who can do it more cheaply because they will obliterate your advantage. A business needs a competitive advantage *other* than price in order to survive in the long term.
As I'm not sure that mail-order DVD rental has already turned into a commodity product/service, I'm don't know how much the Walmart->Netflix price difference really is playing into decisions.
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