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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.
they're going to be a dvd rental force to be wreckoned with, oh yes. ;)
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Amazon has been one of the innovative online business for a long time. How about streaming rental service? Strike a deal with Tivo or somebody else. Why don't they still embrace the future?
Yeah, I wouldn't mind a piece of the pie as well. Netflix, let me jump on the back of your obviously well designed and considerably successful business. Will you just send me a check, or should I do anything else?
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.
what is the viability of startubg a DVD mail service right now? Are they trying to build a client base for the inevitble switch to streaming, which granted is still a few years off, or just trying to get in and steal a bit of market share while they can. hmm. it reminds me of back in 2001, when i worked for an internet kiosk company. we all knew that wireless tech was hitting the market and that it basically spelled doom for the company, but the higher ups hoped to make as much as they could and (hopefully) sell the company off to a major player before wireless came to fruition...the company was gone within 2 years.
Amazon.co.uk already provide this service, which I think is backed by Lovefilm.com (email me for a double length free trial, 28 days instead of 14), which is basically the top UK online DVD rental site (run by Online Rentals Ltd). Ive been a Lovefilm member for 16 months now, and I dont have a single word of complaint about them - fast service, good rates and a very easy to use site.
I really don't think the market could hold another major competitor, so partnering with Blockbuster or Netflix would be a smart move... Although I heard rumors that Hollywood Video might also be looking at starting an online movie rental business. That might be an ideal partner for Amazon, as both are fresh in the business.
Also, for a shameless plug, if there are any Netflix users out there, and you think dealing with your queue is a pain, try my new software (Windows), called FlixQueue.
http://www.5hyphen.com/FlixQueue/index.htm
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They could learn a lot from blockbuster UK, in a what not to do sense - I always know what DVD is coming next - it's the one from the bottom of my list!
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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.
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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.)
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I wonder if I'll be able to rent used DVDs for less than new DVDs...
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The article seems to favor blockbustor but I don't think they are ever worth using. They have had way too many lawsuits for bullcrap late fees over the last 10 years! I know its true because its happened to my family and we stopped using them a long time ago. Personally its worth it to pay more whether that be netflix or amazon or the two of them combined.
Amazon should go it alone. I know Amazon UK rents DVD's online but I don't know if it's partnered with anyone. Partnering with Blockbuster would be a bad idea. I currently subscribe to it. I thought I'd give them a try first because if they sucked I could always switch to Netflix. Which is what I'll probably do here soon.
Over half the movies in my queue are short wait. I have about 40 in it. Yes I can only have 3 out at a time, but there are some movies I've been waiting months for. And Netflix does have a better selection. If Amazon partners with Blockbuster then my movies will all go to long wait.
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Netflix would fit quite well with the range of products that Amazon has. Amazon has good relations with its customers already, now it could tie them up with a subscription service. If they do it well, the customer gets referrals to movies they might never have thought of and Amazon might use information on viewing habits to suggest books. If Amazon/Netflix are smart, they will also start video on demand.
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..its called Bit Torrent, and is usually quicker than Blockbuster !
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It has become apparent to me that you have mistakenly found your way on to Slashdot.org. I do not blame you for your misplaced comments. You likely felt right at home, with Slashdot's prevalent use of Internet abbreviations and lack of capitalizing proper nouns.
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I'm a Netflix fan, but think Amazon should go it alone for no other reason than I love a price war. :)
They are already doing that. Story link
If Amazon wants to compete like mad in the dvd mail-order rental, start with pr0n. Get a huge library, make some partnerships with adult title companies(for bulk discounts, exclusive deals, whatever), and add that to the regular movie library. Also, don't charge exorbant prices. Treat it like a regular movie, but maybe add a dollar to the rental cost, just cuz you can.
Well-known retailer + pr0n + no shame of walking out of the adult section with it = 3. profit!
Besides, it is well known that innovators seldomly end up being dominant in the markets they created. They can never compete with the marketing and sales channels of large, established firms.
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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