Amazon, DVD rentals and LoveFilm
So Amazon’s dropping its DVD rental experiment after a few years of working it in Europe. I’ve read no shortage of pieces suggesting that this is Amazon losing the war v. Netflix. Which is probably true - I mean, it’s getting out of the DVD rental business before ever making it into the US.
I’ve got a different view on it, though. Back in 2004, DVD rentals were hot business, it was the big mass market way to get movies into consumers’ hands. You seeing where I’m going with this? It’s 2008 now. It’s still actually true, there’s no mainstream alternative to it… but the writing is on the wall. DVD rentals are yesterday’s news, maybe today’s news, too, but tomorrow? It’s going to be digital distribution.
My take on this is that given the sizeable investment to build out an infrastructure to handle the very specific task of mail order DVD rentals - Amazon decided to be forward looking and assume that it’d be better to focus on digital distribution. Apple TV is blazing that trail, along with several others trying to figure this out - as a consumer experience if they can get this right it is so much more satisfying than a Netflix situation where you get the movies at random times, not when you actually want to watch them.
Digital is a big win for Amazon - they don’t have to worry about eating shipping costs, they don’t need to worry about distribution centers and massive stock of long tail physical objects for the sake of having a huge catalog. There are few companies that can match their experience in moving bytes around the internet between their various websites and their cloud computing offerings so they have a competitive edge in the coming days. And while Apple seems to have a lock on this whole thing, fear of Apple is prompting the various media companies to look for possible competitors and Amazon has to rank at the top of that list.
Once there’re reasonable ways to get instant access to digital video from home the huge investment in physical distribution of DVDs will have been a waste. So why start with that now? Let Netflix own that space by the time Amazon could really be competition the space will already be on the decline. To me, this is a great move on Amazon’s part. You think this is a forward looking move? Or an admission of defeat?
February 10th, 2008 at 5:45 pm
We’re watching Annie with our daughter on Netflix’s instant digital delivery system right now. Works great! I wish there was a mac client but it works fine in VMWare. Netflix has more than 6000 movies to watch whenever you want to and they don’t go against your DVD queue.
We love the service. We’ve been rolling through the Werner Herzog movies that are there and there are a lot of family moveis to pick from as well.
February 11th, 2008 at 10:58 am
Wow, really? It works well on VMWare? That’s pretty amazing, wouldn’t think it had the chops for streaming video. I think that video dll/streaming is definitely the way things are going - mailing DVD’s around will be remembered a as a quaint blip in history. :)