Amazon To Rent DVDs

from the a-bit-more-competitive dept

Along with Netflix's earnings announcements today, they also revealed that Amazon is about to enter the DVD rental market, requiring them to drop their own prices. First off, it's pretty interesting to see a company revealing a potential product launch from an unexpected competitor. You don't see that every day. Still, it says something about the nature of competitive information these days. Furthermore, despite all the hype about Wal-Mart and Blockbuster getting into the DVD rental business, it's Amazon's pending entrance that clearly has NetFlix worried. That's because Amazon is much more able to compete to NetFlix's strengths: offering movies that fall under the long tail, and coming up with good recommendations for other such movies to rent. Neither Blockbuster nor Wal-Mart were likely to compete all that strongly on either front, but Amazon clearly has experience in both. Amazon also has a pretty impressive logistics team, though, it will have to be adjusted for rental offerings, rather than simply selling goods.

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  1. identicon
    Tony Gentile, 15 Oct 2004 @ 12:33pm

    Re: They're making this too easy

    Anonymous -

    You are correct, and incorrect (IMO). More specifically:

    You are correct; Greenberg did not say that Blockbuster expected to have more subscribers by the end of 2004 than NFLX. In fact, he said more subscribers than NFLX had after 3.5 years. I've corrected that on my blog and appreciate your pointing it out.

    You are incorrect (again IMO), in your analysis of the situation, and your example spells it out well. If Time magazine's numbers are constant from quarter to quarter, they have a problem, as they are experiencing zero growth. My hypothetical little sister still wouldn't be a threat after selling 1 magazine, but if her magazine's growth curve continued (and moreover, if it continued to accelerate, e.g., logrithmic/exponential growth) she would eventually represent credible competition (assuming both she and Time were targeting the same audience, advertisers, etc, etc).

    The fact is, Blockbuster's service, from what we've been told, is growing subscribers at a faster rate than Netflix. Since this is a zero sum game (i.e., beyond trial, a consumer will choose one and only one subscription rental service), net subscriber additions and corresponding growth rates are, in fact, extremely important and telling.

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