Will it be Netflix vs. Amazon? Or OnLive?

Dave Zatz —  January 28, 2012 — 17 Comments

While Netflix may or may not have gained paying streaming subscribers last quarter, they’ve clearly given up on the idea of peddling physical video game rentals. But, I have to wonder, if thinking games and given their current emphasis on digital delivery, might Netflix elbow into OnLive or Steam‘s territory at some point?

In regards to Netflix’s core video streaming competency, Amazon is reportedly rethinking their Prime Instant offering, currently bundled with a shipping discount program ($79/year), into something more directly competing with Netflix. From the New York Post:

Jeff Bezos and his team at Amazon are weighing a move to beef up the Web retailer’s video-streaming service — possibly carving it out as a standalone, subscription-based operation

Given the effort currently expended to license content, potential upside, and rumors that Amazon contemplated a Hulu acquisition, this isn’t so far fetched. If so, what might Amazon charge for a dedicated streaming subscription? I can’t imagine Netflix’s $7.99/month is sustainable as content licensing fees increase. Which we suppose is the price of success. And if it’s the likes of Netflix versus cable, the establishment has already won… as content owners such as HBO and ESPN tie arguably more compelling online entertainment to television or broadband packages.

17 responses to Will it be Netflix vs. Amazon? Or OnLive?

  1. While we’re talking Amazon… I’d lay even odds on us one day seeing a Kindle-branded Android smartphone.

  2. NO, content licensing fees will be forced down dramatically and then the licensing and agency parts will be eliminated by automated posting processes.

    No the establishment has already lost because neutrality is will remain in place and trojan anti neutrality garbage like ACTA/PIPA/SOPA will continue to fail.

    The public doesn’t want to pay people who make their money off of restricting access and is working on eliminating these fools.

  3. The multitude of retransmission and carriage disputes in light of deals like STARZ/Netflix and those aforementioned bundled streaming packages from the post suggest otherwise. It’s also worth mentioning that even Netflix positions themselves as a service to augment pay TV, not to replace it. What we as consumers hope for and what actually comes to pass may not be the same. Perhaps one day we’ll arrive a a logical, sane over-the-top video marketplace. But it won’t be in 2012.

  4. “The public doesn’t want to pay people who make their money off of restricting access and is working on eliminating these fools.”

    Information may want to be free, but TV shows with budgets of $60 million a season want to be expensive.

    I like paying for my excellent FiOS TV package. Paired with my TiVo, it offers excellent value for the dollar.

    And I’m willing to buy some a la carte video from Amazon for more esoteric material. It’s a much worse value, but it nicely fills in the gaps.

    “No the establishment has already lost because neutrality is will remain in place and trojan anti neutrality garbage like ACTA/PIPA/SOPA will continue to fail.”

    I’m not sure you fully understand how the federal government operates. Some type of IP protection bill will pass in the relatively near future, and while it (hopefully) won’t be anywhere near as offensive as SOPA/PIPA, it will, at a bare minimum, make piracy more of a chore, which is all it needs to do.

    Content creators do need to get paid, or the quality of content goes into a dark age…

    —–

    “If so, what might Amazon charge for a dedicated streaming subscription? I can’t imagine Netflix’s $7.99/month is sustainable as content licensing fees increase.”

    But all-you-can-eat streaming wants to be cheap, just like all-you-can-eat Vegas buffets want to be cheap.

    These services are either marginal add-ons, in which case they need to be cheap, or they’re targeted at penny-pinchers, in which case they need to be cheap.

    Until a lot more infrastructure gets built out to deliver high bandwidth IP single-casts to the lean-back, I think the cheapie Netflix price point is likely to hold. The whole OTT thing isn’t ready to scale.

  5. I think Amazon has a big edge over Netflix. Netflix does not sell anything. They have to provide you a disc or stream to keep you from buying.

    Up until lately they have been doing that for me. I like BBC nature shows, but want to see them before I buy them. For whatever reason, Netflix refuses to carry Madegascar on BD. Amazon asked way too much for the BD, but wait, what’s this $6.99 HD purchase I can make? It ain’t blu ray, but it looks pretty good, and I expect that the quality will get better over time.

    Netflix’s big blunder here is that I made my first purchase of a digital video from Amazon. I already have a bunch of devices that can play it, including my trusty Netflix playing Roku. The only real downside is that I can’t lend my purchase to my Dad. I own it for life or the life of Amazon.

    Now I see the value of the prime membership, so does my Dad, a Netflix one at a time customer. I rarely use Netflix streaming, but I have more lately since the audio has improved. On top of that, most of the tv looks better than what I get from TW cable! If you like offbeat/Foreign films/TV, it’s a great service, if you want current popular movies, it’s not. It sure makes the 3 at a time bd look expensive. It would not be difficult for Amazon to match/exceed Netflix in streaming. What do you lose in switching besides your queue?

    What I don’t understand is where is the Amazon tv player? Why isn’t there a Roku like device to go with the Fire? I know that the Roku does it and more, but it seems so obvious!

    So bad move Reed Hastings in not getting Madagascar in BD for me. I discovered a service that brings content to me for $79 a year, or a la carte.

  6. Greg, I’ve thought about it. But small TV boxes haven’t really taken off. It’s a better bet to keep making channels for the existing Rokus of the world or stream Amazon Prime via AirPlay to Apple TV. Amazon probably moved more Kindle Fire tablets in one holiday season than Apple sold Apple TVs in the same quarter (1.4mil) or Roku has sold streaming boxes in three years (2.5mil).

  7. “Amazon probably moved more Kindle Fire tablets in one holiday season than Apple sold Apple TVs in the same quarter (1.4mil) or Roku has sold streaming boxes in three years (2.5mil).”

    Of course, that begins to answer the larger question.

    Netflix and Amazon are in two different businesses. Netflix is trying to sell the Netflix streaming service. Amazon is trying to build an ecosystem around the Fire platform…

  8. I’m not sure that Amazon is trying to build an ecosystem around the fire as much as they are trying to build it around the cloud. The fire is just one of what I expect to be many devices. I already have the amazon player on my roku, phone, tv and dvd player not to mention more full featured devices like a pc. If Roku can make a $49 device, I expect Amazon will have one for $29.

    For me it got rolling with the $5 music sale they had around Christmas. I have over a thousand cds, but haven’t really purchased any in years. Internet radio and lack of a convenient way to play purchased music kept me on the sidelines. Now I buy something from Amazon and I can play it immediately on my Phone at my uptight workplace.

    So I become comfortable with music in the cloud, next comes video. If Netflix does not offer everything I want, but Amazon does, why do I need Netflix? The real question is, does Amazon view Netflix as a competitor? I think they do.

  9. Netflix wins vs. everyone. See here:

    http://www.tnl.net/blog/2012/01/28/streaming-held-back/

    Furthermore, the comments are talking about the Kindle Fire and not the iPad (and for some reason comparing a tablet to a STB). Amazon doesn’t say how many Fires they sold but, Apple sold 15 million iPads just last quarter.

  10. That chart includes low def, new release Starz content… which Netflix hasn’t and may not renew.

  11. I’ve been using Netflix for quite a while now, but, I’m really just waiting to see which streaming provider comes out on top before I decide to switch.

  12. “Amazon probably moved more Kindle Fire tablets in one holiday season than Apple sold Apple TVs in the same quarter (1.4mil) or Roku has sold streaming boxes in three years (2.5mil).”

    The Kindle Fire is a tablet and the Apple TV is a set top box. Dave, why are you comparing how many units were sold last quarter?

  13. “That chart includes low def, new release Starz content… which Netflix hasn’t and may not renew.”

    Following that logic, it also doesn’t include the DreamWorks titles that aren’t on Netflix yet.

  14. “The Kindle Fire is a tablet and the Apple TV is a set top box. Dave, why are you comparing how many units were sold last quarter?”

    I was responding to the suggestion that Amazon might create a dedicated streaming box and making the point that streaming boxes haven’t quite set the world afire, that’s it’s probably a safer bet for Amazon to continue pursuing/emphasizing their current mobile strategy… while creating apps for the existing box makers. Tablets excite people, set-top boxes are more likely to confuse them. Having said that, there’s no reason why Amazon couldn’t come out with their own streamer and advertise it on the front of Amazon.com.

  15. There’s no “probably” about it. Amazon sold something like 5-6 Million Kindle Fires in one quarter, probably four times the number of Apple TVs sold that quarter and 2-3 times the number of Rokus ever sold.

    Sure they’re different devices, but the raw numbers still matter. Amazon is going to be paying a lot more attention to those customers, and yes iPad users, than they are to increasing the number of clients supporting Amazon Instant Streaming beyond that Roku device.

    Yes I wish they’d get out there and crank up the number of OTT TV clients too, but I’m not sure that’s their top priority at this point.

    Hey Greg, how do you play Amazon TV/Movie content on your Phone? I’m not aware of any players for either iOS, Android, Windows Mobile etc at this point.

    Given that Amazon makes money selling content, they should be interested in getting their clients on as many devices as possible. Wish they would make a client for iOS and Android sometime soon, just like they do with the Kindle eBook content…

  16. Hmm, I guess I just assumed it was there since they had it for the Fire. I would guess that they will have a phone video player at some time since Netflix has one.

  17. “I would guess that they will have a phone video player at some time since Netflix has one.”

    Perhaps they will.

    But again, Amazon and Netflix are not competing in the same business…

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