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Amazon Prime'd to Vanquish Netflix

Posted by Sheila Shayon on September 3, 2012 09:47 AM

As the grandfather of streaming video, Netflix has suffered the slings and arrows of being out front, exacerbated by hubris and internal missteps.

The video rental company's announcement of separate fees for DVD and streaming services a year ago was a disaster, one that was exacerbated by CEO Reed Hastings’ foot-in-mouth comment regarding subscriber outrage, "It's something we'll monitor, but Americans are somewhat self-absorbed."

“Despite shrinking margins, a weakening balance sheet and increased competition, the stock was bullet-proof. Netflix was the great Achilles that vanquished Blockbuster Video with a little assistance from Coinstar's Redbox. But like Achilles, Netflix was not invulnerable,” notes Seeking Alpha.

Enter Amazon and its move to free video streaming with Amazon Prime in February 2011, membership priced at $79/year, including free Super Saver Shipping, free book rentals via Kindle and the add-on to rent or buy digital movies and TV shows for an additional fee providing newer content overall than on Netflix.

Netflix has subtitles on about 80 percent of its movies, while Amazon has none, and the former offers a genre menu, personal queue and recommendation algorithms. The bottom line, as the New York Times puts it: "Netflix beats Prime on movie selection, site clarity and playback features. It has much more to watch, too; Netflix won’t say how many movies it has, but informed estimates put its catalog as twice the size of Amazon’s."

Hulu, the joint venture between NBC Universal, ABC Television Group, Fox Entertainment Group and others, is free to consumers through paid ads. Hulu Plus, the paid subscription tier, offers new TV product in early windows, competing more directly with DirecTV, DISH, and Comcast.

Apple’s sale of digital videos through iTunes Store, as with its music business, is more about selling hardware than content. For now it has allowed a Netflix app on its mobile devices — which may be short-lived when Apple TV relaunches.

And new kids on the block Verizon and Coinstar's Redbox service are beta-testing a JV that integrates streaming and DVD delivery, via 36,000 kiosks – plus video game rentals.

“Netflix needs to prepare for war. They need to address their perceived weaknesses and build on their strengths,” writes Seeking Alpha.  

By offering video games as part of their DVD/Blu Ray delivery service and new content through Open Connect to fill the space between casual and hardcore gamers, “Netflix could exploit that gap by allowing small and medium sized developers to publish and distribute games through its content delivery network. Adding a few new movies and TV shows a month is good; adding a catalogue of streaming video games could be a game changer.”

A disruptive advantage for Amazon is speed of delivery. “If Amazon Prime succeeds in implementing the same day delivery system, shoppers are likely to become more accustomed to the point and click shopping model.” 

The reams of comments on David Pogue’s article in the Times, "Potluck for the Eyeballs: Amazon’s Streaming Service," reinforce that the turf wars now being fought will be settled by the marketplace itself:


I've always found Amazon's movie browsing to be an impossibly bad experience, which is surprising because their other lines of business are so good…Netflix, however, has nearly EVERY movie - if you're ok waiting a day or two for a DVD. It's the combined service (DVD + streaming) that gives Netflix their biggest edge. For instant gratification people who have to have it now now now, there's still plenty to watch on-demand.

Ana M:

To be honest, I'm annoyed with both services. I find the Amazon search function horrible for their Prime free streaming, and Netflix has a really limited amount of titles to watch.


Other than as a pipe to the internet, cable is becoming redundant. Set top box (Roku, Apple TV) with OD service (Netflix, Amazon etc) seems to be the inevitable way to go. Amazon definitely has a better model of upselling new movies, but there is a lot of dust yet to settle on the streaming media landscape.

With so many models bubbling up in the digital world, "it’s complicated" has become the cliché du jour. Perhaps what will emerge is a return to the days of two major choices, a Hertz/Avis, HBO/Showtime landscape, or one where subscribers use both services in tandem for different reasons. Perhaps, Netflix will prevail for streaming video and Amazon for free shipping, free e-book rentals, and occasional new movies not offered on Netflix. Stay tuned.


Felicia United States says:

The title seems geared to get hits. I didn't see the case made as to why Amazon Prime would make Netflix a dinosaur. I have Hulu Plus, Netflix and Amazon Prime. Amazon Prime in terms of selection is the worse of the three. They have no queue function on all devices. Every time I watch a video through my Blu-Ray player, I have to search for it and then remember what the last episode was that I watched because Amazon doesn't at least gray out the last episode you watched. Netflix isn't perfect but whether I watch on my iPad or through my Blu-Ray player, it has a queue, better search function and I don't have to try and remember what number episode. If it were not for Amazon Primr having Fringe, I probably wouldn't use it for streaming.

September 3, 2012 09:26 PM #

MP Canada says:

It was stated in the article that Netflix has every movie....but that is not the Canadian experience...the Netflix movie oFferings in Canada is substandard at best,it reminds me of an old 'mom and pop' video store I used to visit back in the day....you would find a handful of new B movie releases....and a whole lot of old movies noone wanted to see. Maybe their CEO Hastings has an explanation for this pathetic movie list they offer to the Canadian market.

September 4, 2012 06:41 AM #

Felicia United States says:

Outside of the US, I thought licensing laws are different so this may be why your experience is different than ours in the states. American producers of content as is charge an arm and a leg to allow anyone to stream content.

September 4, 2012 08:01 AM #

Erika United States says:

Thank you Felicia. You just made me happy I am sticking with just Netflix streaming for now.. Ease of search and history are key factors for me. The only thing so far that is distracting for me is if and when Apple comes out with the new tv.

September 8, 2012 09:49 AM #

S A GOULD United States says:

I am happy with Netflix. (Have been with them from the beginning.) I am happy with Amazon. (Have been with them from the start, too.) But when ANY company becomes so big it swallows up all the competition, it usually does NOT bode well for the consumer.

September 8, 2012 12:57 PM #

Comments are closed

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