

Amazon vs. Netflix: Streaming Battle Heats Up - jkuria
http://online.wsj.com/article/SB10001424127887323701904578278130361293460.html

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tzs
I've been confused by Netflix's business strategy for a while. I'm not much of
a business guy, so maybe I'm just missing something.

I've made do for movies with the channels that came along for the ride when I
subscribed to the minimal cable TV package that got me the nerd channels
(Science, Discovery, Nat Geo, History, and so on). I've got quite a backlog of
movies I'm waiting for.

Recently, I caught a movie (How to Train Your Dragon) on TV that I liked so
much that I simply had to go buy a copy on Blu Ray. This also necessitated
buying a Blu Ray player. I picked a Blu Ray player that also plays streaming
content from the internet and supports pretty much everything other than
iTunes.

I then started researching the streaming services (both subscription and
rental), seeing how well they covered the movies I'd seen in the last couple
of months on TV (HTTYD, Star Trek, Kung Fu Panda, District 9, Watchmen, Shrek
Forever After, Happy Feet, Tangled, Bolt, Despicable Me, Monsters vs. Aliens,
Fargo, Fantastic Mr. Fox), as well as how well they covered movies still on my
backlog, plus assorted movies I'd like to rewatch.

Here's what I found. Neither Amazon nor Netflix subscription streaming
provided good coverage of the movies I'd recently seen, the movies on my
backlog, or the movies I want to rewatch.

The streaming rental services were a bit better, but still missing a lot.

Netflix's disc subscription service, on the other hand, covered pretty much
everything.

So here is where I get confused. Netflix seems to think their future is in
their streaming subscription service. This seems to me to be a pretty risky
basket to put all their eggs into, because it seems to me that Amazon will
have an easier time fixing their weaknesses compared to Netflix than Netflix
will have fixing their weaknesses compared to Amazon.

Amazon's weakness compared to Netflix is that Netflix apparently has more
content (that's what people tell me, although for the movies I'm interested in
they seem about the same). To fix that, Amazon just needs to make some
licensing deals. They don't have to build out a lot of new infrastructure or
enter a new line of business or anything like that. It's a "write a check"
problem for them.

Netflix's weakness compared to Amazon is that Amazon subscription streaming is
part of Amazon Prime--and there are good reasons to have Prime besides the
streaming. I got it for the shipping savings, and I'm also enjoying the Kindle
lending library. (Brick and mortar retailers, like Barnes and Noble, and Best
Buy, seem to be doing their best to drive people to Amazon, and so I see
Amazon Prime becoming more and more common--but this is best left for another
rant).

This makes the question for a lot of people "Netflix in addition to Prime?"
rather than "Netflix or Prime?". That's a much harder case for Netflix to
make. As I said, for the movies I've checked there are very few on Netflix
that are not on Prime--it would cost me less to simply rent those movies. As
Amazon closes the gap on content, "Prime plus rental" will become a better
choice than "Prime plus Netflix" for more and more people.

It seems to me that Netflix's best weapon against Amazon is their disc
subscription service. It provides the most content (both recent and older). It
provides the highest quality content. It provides extras (commentary, deleted
scenes, and all the other nifty things that come on disc besides just the
movie).

Yet Netflix treats their disc service almost as if it is an embarassment.
There's no link on their main page for it. It only seems to be mentioned in
their FAQ, where they imply that it is an add-on service to the streaming
service, and give no link to details.

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tptacek
Businesses built on conveying physical media for digital content are dead.
First music, now a race between games and movies. In 10 years, disks will be
an anachronism. What's Netflix to do? Its disk delivery isn't a moat against
competition; the market sees the 60pt writing on the wall. Delivery was even
held against Netflix early on during streaming negotiations.

Amazon and Netflix are different models. Prime has a free streaming service,
but Prime free streaming is very limited compared to Netflix and seems more
likely a loss-leader for Amazon's large PPV streaming catalog. Netflix seems
to be to Amazon what Spotify is to iTMS. iTMS has the objectively more
attractive offering, but I use Spotify (well, Rdio) far more often. Similarly,
I use Amazon when I want to pay money for a specific movie, but when I'm just
looking for something to watch, I'm on Netflix.

No question, though, Netflix is in an exposed position. Spotify has the
advantage of being a nimble early entrant with mostly undefined expectations.
Netflix has a giant target painted on its head.

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tzury
This conflict is interesting given Netflix is a large customer of AWS.

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hayksaakian
I hit a pay wall by clicking that link.

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dromidas
Me too... why is it that Forbes and Wall Street are such awful websites.

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jkuria
Would it illegal for Amazon to refuse Netflix as a customer? (Assuming there
are many players in the streaming space and anti-trust is not a concern)

