Amazon Take on Netflix with Unlimited Video Streaming

[Smokey]

If you do a lot of shopping on Amazon.com, you've no doubt come across the site's $79 per year "Prime" membership option.

The basic idea is that for $79, you get free two-day shipping on just about everything sold directly by Amazon . And the company has now decided to throw in free video streaming from its Amazon Instant Video service to its "Prime" membership.

Amazon's Prime-eligible free video streaming comes right as competition between streaming video service is heating up. Netflix currently offers an $8-per-month unlimited streaming plan.

Currently there are 1,669 movies and 484 TV shows for free streaming, which can be found here:

http://www.amazon.com/s/?node=16261641&field-is_prime_benefit=1

[Woochifer]

Still got a way to go before it matches the selection offered up on Netflix. According to the linked article, Amazon Prime has about 5,000 titles available, while Netflix has 20,000. And it's not just the quantity of selections, but the quality, as Netflix seems to have more recent titles available compared to Amazon Prime.

http://today.msnbc.msn.com/id/41747069/ns/technology_and_science-tech_and_gadgets/

On paper, Netflix's selection of about 20,000 titles beats out Amazon Prime's 5,000 titles, but there's a chance Amazon Prime could have the same popular titles as Netflix, right?

Wrong. Amazon Prime's selection isn't even close. A quick survey of Amazon's "Prime Eligible" pages for movies and TV shows reveals a dismal lack of popular and recent titles. For example, the top 5 Prime movies, according to Amazon's page, are "The Girl Who Kicked the Hornet's Nest" (2009); "Hairspray" (2007); "Analyze This" (1999); "Contact" (1997); and "Charlie's Angels" (2000). Netflix's most recent movie arrivals include "Star Trek" (2009); "2012" (2009); "Crank 2: High Voltage" (2009); "Imagine That" (2009)" and "The Young Victoria" (2009).

None of the Netflix recent arrivals is available on Amazon Prime; however, you can stream these same titles using Amazon Instant Video, the site's pay-per-view streaming service.

My wife subscribes to Netflix basically to catch up on TV series that she missed in recent years. I've also used it catch up on the first few seasons of Torchwood. But, there are holes galore in what the streaming service offers up, and Amazon Prime offers even less.

My impression of these streaming services is that they are depositories for titles that have exhausted most of their value (i.e., they've already concluded their theatrical and PPV runs, and the DVD/Blu-rays are getting marked down). The reason why these services are inexpensive is the same reason why DVDs wind up in the WalMart bargain bins -- they're not in demand anymore.

Basically, Amazon Prime's streaming service is basically a freebie thrown into a program that's otherwise nothing more than unlimited free shipping. I doubt that Amazon is paying much for content, which of course means that they won't have the most in-demand content on their system.

And I think that's at the core of the fallacy that tech bloggers keep pushing -- that streaming services are causing a massive wave of cord cutting, as consumers dump cable/satellite in droves and stop buying DVDs and Blu-rays. What those geeks don't get (and probably never will get) is that consumers are driven not only by what they want to watch, but when they want to watch it.

Consumers flock to movie theaters because they want to watch a movie right when it comes out. They buy DVDs and Blu-rays in large numbers right when they get released. Those are the consumers that will pay more to watch something at the time of release, and that's the time when demand is highest.

[Smokey]

Still got a way to go before it matches the selection offered up on Netflix. According to the linked article, Amazon Prime has about 5,000 titles available, while Netflix has 20,000.

Although as you said currently Netflix have more tiltles, but it is worth metioning that Amazon already have more the 75,000 on demand titles. So if Amazon decide to expand their free streaming cataloge titles, they can over take Netflix in quantity.

If you really think about at it, it is a win win situation for Amazon and a very smart business move. They already have a built in subscriber (prime members) and there is no other way but up. Even if they lose money on this streaming venture, it probably get off set by new members buying stuff on amazon to excercise their free shipping privilage.


And I think that's at the core of the fallacy that tech bloggers keep pushing -- that streaming services are causing a massive wave of cord cutting, as consumers dump cable/satellite in droves and stop buying DVDs and Blu-rays. What those geeks don't get (and probably never will get) is that consumers are driven not only by what they want to watch, but when they want to watch it.

And seeing their movies in highest possible picture quality. I don't think streaming SD will look as good as DVD, anf for sure streaming HD will not look as good as Bluray. Not to mention shortcoming in sound quality :)

[Woochifer]

Although as you said currently Netflix have more tiltles, but it is worth metioning that Amazon already have more the 75,000 on demand titles. So if Amazon decide to expand their free streaming cataloge titles, they can over take Netflix in quantity.

It doesn't quite work that way. Amazon only streams what they hold the rights to. Those titles that you mention are all pay-per-view files. Amazon has already negotiated how they would handle the revenue split for those titles. It's not up to them to just snap their fingers and expand the streaming catalog.


If you really think about at it, it is a win win situation for Amazon and a very smart business move. They already have a built in subscriber (prime members) and there is no other way but up. Even if they lose money on this streaming venture, it probably get off set by new members buying stuff on amazon to excercise their free shipping privilage.

That would depend on the cost structure for the titles in their streaming library. Scanning through the library, the top viewed titles on Amazon Prime are long-in-the-tooth even by DVD discount bin standards. Netflix at least has some movies on its streaming site that were top selling performers a year ago (e.g., Star Trek). Judging not only the quantity of titles but the quality (as in higher demand) of the available titles, I would guess that Netflix is scratching out bigger checks to the studios right now.


And seeing their movies in highest possible picture quality. I don't think streaming SD will look as good as DVD, anf for sure streaming HD will not look as good as Bluray. Not to mention shortcoming in sound quality :)

Have you tried Netflix or Amazon for yourself?

From my viewings on Netflix, the picture quality can really vary. A lot of the SD material even in the highest datarate mode looks like crap. I mean, it's worse than SD broadcast TV, and nowhere near DVD quality. Other titles look decent.

With my 3.0 Mbps connection, I can get a steady HD picture. It's surprisingly good for the connection speed (the datarate is lower than most DVDs, but uses the more efficient VC-1 codec), but the picture quality is step down from even HD satellite broadcast. Not surprising, considering that satellite HD channels typically use datarate of 5.0 to 9.0 Mbps with the MPEG-4 AVC codec. Compare this with Blu-ray, which tops out at 36 Mbps, and it's a long way off.

[Smokey]

It doesn't quite work that way. Amazon only streams what they hold the rights to. Those titles that you mention are all pay-per-view files. Amazon has already negotiated how they would handle the revenue split for those titles. It's not up to them to just snap their fingers and expand the streaming catalog.

But the potential is there. Amazon might have more bargaining power than Netflix with the content providers giving that Amazon is like Walmart of cyber world with no sale tax (most states) and shipping cost. So "impulse" type purchases might kick in more often.


Have you tried Netflix or Amazon for yourself?

No, I have not. But I have downloded few TV show and movies from the Usenet. And as you metioned, the SD material is a hit and miss. But some of HD materials does look pretty good.

[Poultrygeist]

I wonder if the Amazon "Free Shipping" is only for items sold by Amazon or does it cover all other Amazon vendors? I buy lots of used CD's from Amazon vendors that generally don't qualify for free shipping. It's too good of a deal if it covers all vendor shipping.

[Smokey]

As you said it, its too good to be true :)

[Woochifer]

But the potential is there. Amazon might have more bargaining power than Netflix with the content providers giving that Amazon is like Walmart of cyber world with no sale tax (most states) and shipping cost. So "impulse" type purchases might kick in more often.

Again, the titles used for streaming and those made available for paid downloads are separate contracts. Downloads are a basic revenue split, whereas streaming rights are similar to those blanket content deals that the studios negotiate with HBO, Showtime, and Starz. Having one does not affect the other.

In their competition with Amazon, Netflix has the upper hand right now because they got the eyeballs and the content. But, don't underestimate the bargain chip that the studios hold -- the keys to the content. With an escalating audience comes escalating fees for content. A lot of Netflix's earlier contracts are now coming up again, and the more recent fees getting signed are exponentially higher than before. (With just one studio these fees went from roughly $40 million to over $200 million)

Amazon has bargaining power, but the question is how much they would use it given how thin their margins are as a whole. With Amazon only now getting their steaming service up and running, how willing are they to pay nine-figure sums to each of the major studios? And are they willing to ratchet up the ante by negotiating exclusive windows for certain movies and TV shows? That exclusivity costs money, as does the rights to show movies closer to their original theatrical and home video runs.

The other thing to keep in mind is that deals can and do expire. If they don't get renewed, then those titles get removed.