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
    Mark, 15 Oct 2004 @ 4:04pm

    Re: They're making this too easy

    Blockbuster's service, from what we've been told, is growing subscribers at a faster rate than Netflix.

    Many years ago I was watching a broadcast of the Boston marathon. The announcer was exclaming with enthusiasm about the rapid gains women had been making in the marathon (only recently had women been *allowed* to run in major marathons -- this is a crucial detail). He confidently predicted that soon women would be running the marathon faster than men, since their times were improving so much more rapidly.

    I think you might be making the same mistake. It's easy to show a rapid rate of growth early in a process, because you're improving on an immature performance. Early rates of growth are a very poor basis for predicting future performance -- that was true of women's marathon times, and it's likely to be true of Blockbuster as well. Netflix has been at this longer, and among long-term customers (such as myself) they tend to have high user satisfaction. Blockbuster isn't going to find it easy to equal that, much less exceed it.

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