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
    Anonymous Coward, 15 Oct 2004 @ 2:02pm

    Re: They're making this too easy

    Let me illustrate more clearly why I think Blockbuster's statistic is misleading.

    Netflix gained a certain number of new customers this quarter, as did Blockbuster. The reason Blockbuster highlights *net* additions is because Netflix, unlike Blockbuster, lost some existing customers (you can only lose existing customers--and blockbuster started with zero). Given Netflix's public release yesterday (see "churn"), that number is in the low-hundred-thousand range, versus their 2.2 million subscribers. So the number of new customers that Netflix gained is somewhere in the two-to-three hundred thousand range, and the net customer level looks like the mid hundred-thousand-range.

    I don't know Blockbuster's numbers exactly, since they haven't released them. But to put it more succinctly, I'm saying:

    If both Netflix and Blockbuster started the quarter with 0 customers, then right now, Netflix would have more customers at the end of the quarter.

    Yes, the net additions fall in blockbuster's favor, but that is only because blockbuster doesn't have any subscribers to lose.

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