Amazon to Enter the Online DVD Rental Business

ChrisF79 writes "Wired News is reporting that Amazon.com is hiring programmers to work with online dvd rentals. From the article: "Advertising for positions based at the company's Seattle headquarters, the listings seek engineers to help in 'building systems and algorithms that must move inventory between our fulfillment centers and our customers in a way that gives customers exactly what they want, when they want it.' The postings indicate they are specifically for an online DVD rental service." Netflix seems to have a stronghold on the market so despite numerous advantages for Amazon, especially economies of scale, can Amazon enter the market and surpass Netflix?"

Comments

Advantage: Amazon

[jmp_nyc]

Amazon has the clear advantage here. They already operate distribution centers in several locations around the US, have experience in inventory management and quick shipping, and can even rent videos at a slight loss for a while, using it to drive business to the rest of their operations.

Of course, if all that fails, they can follow their usual MO and file a patent for the idea of unlimited online rentals for a monthly fee and drive Netflix out of business that way.
-JMP

Re:Advantage: Amazon

[bedroll]

Netflix needs better competition anyway. Blockbuster competes on price and that they give in-store rentals, but they don't compete on service.

A co-worker recently did a trial comparison of the two services. He found that Netflix sent, received, and processed faster. Also, he found the entire sign up process easier with Netflix (mostly due to an error Blockbuster's site experienced with his sign up, which could be a one time issue). Their website is better designed. Basically, they're just a better online service than Blockbuster has been.

Amazon has proven to be a good online service. My personal experience shows that there's rarely ever need to use anything but super-saver shipping because most things get to me just that quick. Their website works: I can find stuff, I can buy stuff.

If anyone can compete with Netflix it's them, hopefully this will either force Netflix to continue to improve or lower their prices. That means that I win. If nothing else, they probably won't raise prices or worsen service, so I at least won't lose.

Instant gratification

[phpm0nkey]

I was a NetFlix subscriber for about two years, because they were the best of what was around. Recently, I switched to Blockbuster's in-store unlimited rentals, because it could give me something that NetFlix couldn't: instant gratification.

I am fickle. With NetFlix, I too frequently found a DVD in my mailbox that I felt like watching 3 days ago. Being able to pick out a movie and be watching it 20 minutes later really makes a world of difference.

Perhaps NetFlix will go one better. With movie downloads just around the bend, it appears that they're taking innovation and competition in their industry very seriously. Amazon may have the inventory and distribution architecture to easily catapult themselves into the market, but if they don't have anything more interesting than DVDs-by-mail on the horizon, they may quickly find themselves left behind.

Re:Instant gratification

[dazzla_2000]

Their other advantage is they've already done this in the UK.

Re:Instant gratification

[Ingolfke]

I was a Blockbuster subscriber... but after a year (and the dreck that's been coming out of Hollywood) I ran out of movies to watch. I wish they'd stock more TV shows (new and old).

If Blockbuster could work out a deal w/ the movie industry to burn the DVDs onsite so they could have all the benefits of an unlimited DVD inventory and all the convenience of 20 minute turn around times, I think they'd really hurt NetFlix & Amazon's business.

Re:Instant gratification

[rale, the]

I think the throttling thing is a bit of an exageration. I just pulled up my 3 month history on netflix's site, and I rented 20, 15, and 17 dvds for a total of 52 over 90 days. Before that I was renting roughly the same amount aswell. I have the 3 at a time plan, which is $18 a month. That means I'm paying $54 for 3 months, which works out to $1.04 per rental, whereas that site says they'll throttle you if you get under $2/per. It is possible that the occasional extra day waits are some sort of throttling measure, but it doesnt seem to me that they're very aggressive, if so. Well, atleast I think I'm getting a pretty good deal at 1.04/each.

Can't wait for the recommendations feature

[Anonymous Coward]

People who viewed "Anal Invaders 4" also enjoyed...

News?

[Florian Weimer]

They have already entered the DVD rental market: Amazon.de Launches DVD Rental Service For Customers in Germany, Amazon.co.uk Launches New DVD Rental Service

Combination with shipping

[Blindman]

The way that Amazon could really gain an advantage is if they could find a way to combine buying other items with DVD rental. If I could buy a book, and get it shipped free with my incoming DVD that would be something. Otherwise, I don't see how they can compete except on price or name regonition.

Too Late?

[canolecaptain]

With the deployment of the XBox 360 in mass quantities in '06, content producers will have the ability to content lock their movies. Microsoft will finally be able to promise that security to media execs, which will then loosen them up enough to allow the streaming to occur. When that desire is coupled with the increased availability of broadband, the on-demand downloading will finally go mainstream with Microsoft attempting to lead the way. Others in this market will be Apple with iVideo, potentially Sony on the PS3, and potentially juggernaut Google to the PC.
Unless Amazon can couple the download with the the DVD rental (both will be necessary), they will be too late to be of consequence. My guess is that Netflix, Intelliflix, and Blockbuster will all begin on demand downloads by the end of next year.

Better website?

[aggressivepedestrian]

I think one thing Amazon will have going for them is their website. Assuming they leverage a lot of their existing code, their initial US launch should be miles ahead of Netflix. While Amazon is constantly adding new features that help me find interesting things in the long tail, I don't think Netflix has made an improvement to their website in the two years I've been a customer.

Don't get me wrong, I like Netflix, but the recommendations they make for me are almost always off target. On the other hand, Amazon is always presenting me with interesting recommendations on music and books.

That's just one feature that I expect they will execute better than Netflix. They also have a slew of fetaures Netflix doesn't offer. Some of the ones I've found useful include "the page you made", "customers who bought this also bought this", "customers who viewed this also viewed this".

Then's there's "Artist Essentials". Just getting into jazz but overwhelmed by the many choices for say, Ella Fitzgerald? Then check out her "Artist Essentials". It's just a static list, so how hard could it be to implement? But if you want an opinion from Netflix about the best movies of, say, Jim Jarmusch, well, you're just SOL.

All in all, I'd say Amazon's entry into this market will introduce some good competition, and we're all going to benefit.

Amazon owns IMDB too.

[MDMurphy]

Amazon bought IMDB a while back, and luckily, hasn't screwed it up. The IMDB is the best source for movie and TV info online. When Amazon bought it, the only obvious change was making the "buy it" link in the upper left corner always point to Amazon.

If they tie it in with the IMDB, that would be pretty handy. Search for "Virginia Madsen" and you see a list of all her movies, with boxes next to the ones available for rental. Tick the ones you want and they get added to your queue.
This is also a plus since you could search with IMDB for any movie, not just the ones they stock. Want a movie that isn't out on DVD yet? Add it to a wish list.

Amazon also has the setup with used DVDs ( and books ) to ofer deals if you want to buy the movies instead of, or after, renting them. I'd expect them to let you know how long your wait will be for a rental while offering a shorted length if you want to buy one now.

Amazon also didn't pump up the IPO by paying spammers like Netflix did. Netflix will always be tainted by that.

The Zero-Cost solution

[TopShelf]

My wife and I have recently hit on a great, free source of DVD's - the Library. For those who haven't been there in a while, check out your local branch and you might be surprised at what's available. We just picked up Donnie Darko, Kinsey, and Lost in Translation the other day. Since we take the kids there once a week to pick up kid's movies and books, we grab a couple for ourselves and when you're on a tight budget, free entertainment is a major bonus...