Amazon Quietly Dumps DVD Rental Business; Guess Netflix Isn't So Easy To Beat
from the netflix-never-dies dept
You really have to hand it to Netflix. Every time some new (big) entrant enters the market and prognosticators insist that Netflix is going down, the company has managed to keep on chugging along — while the competitors eventually capitulate. Remember back in 2002, when Wal-Mart entered the DVD rental market, and everyone thought that Netflix had no chance? Fast forward a few years, and Wal-Mart was shutting down its efforts and handing them over to Netflix instead.
Then there’s Amazon. In 2004, Netflix itself broke the news that Amazon was entering the market, causing plenty of concern. After all, Wal-Mart was a big stodgy company, where you could (possibly) predict that it wouldn’t be able to succeed in a web-based endeavor. However, Amazon was a very different story. Except that it wasn’t. Amazon realized just how difficult it was to do a good job with DVD rentals in the US, and chose to focus just on the UK, hoping to build up experience there without having to compete head-on with Netflix. There was even talk that Amazon might follow Wal-Mart into just letting Netflix handle its own DVD rentals in the US. No matter what, it appears that Amazon’s little experiment didn’t go all that well. It has now sold off the DVD rental business in the UK and Germany to competitor Lovefilm (while also taking a stake in the company).
Either way, it’s yet another example of a big company assuming it could easily take on Netflix in the DVD rental business and finding that it wasn’t nearly as easy as expected. While Blockbuster is still hanging in there, Netflix has shown time and time again that what looks like a simple business isn’t always so easy to replicate. This is an important lesson for those who insist that big companies can always just come in and crush small upstarts. That’s not the way things always work. An idea is one thing. Execution is something entirely different.