Amazon Quietly Dumps DVD Rental Business; Guess Netflix Isn't So Easy To Beat
from the netflix-never-dies dept
You really have to hand it to Netflix. Every time some new (big) entrant enters the market and prognosticators insist that Netflix is going down, the company has managed to keep on chugging along -- while the competitors eventually capitulate. Remember back in 2002, when Wal-Mart entered the DVD rental market, and everyone thought that Netflix had no chance? Fast forward a few years, and Wal-Mart was shutting down its efforts and handing them over to Netflix instead.Then there's Amazon. In 2004, Netflix itself broke the news that Amazon was entering the market, causing plenty of concern. After all, Wal-Mart was a big stodgy company, where you could (possibly) predict that it wouldn't be able to succeed in a web-based endeavor. However, Amazon was a very different story. Except that it wasn't. Amazon realized just how difficult it was to do a good job with DVD rentals in the US, and chose to focus just on the UK, hoping to build up experience there without having to compete head-on with Netflix. There was even talk that Amazon might follow Wal-Mart into just letting Netflix handle its own DVD rentals in the US. No matter what, it appears that Amazon's little experiment didn't go all that well. It has now sold off the DVD rental business in the UK and Germany to competitor Lovefilm (while also taking a stake in the company).
Either way, it's yet another example of a big company assuming it could easily take on Netflix in the DVD rental business and finding that it wasn't nearly as easy as expected. While Blockbuster is still hanging in there, Netflix has shown time and time again that what looks like a simple business isn't always so easy to replicate. This is an important lesson for those who insist that big companies can always just come in and crush small upstarts. That's not the way things always work. An idea is one thing. Execution is something entirely different.
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Filed Under: dvd rentals, germany, uk
Companies: amazon, netflix
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Not so small...
Not really. Netflix is just showing a rare exception to this rule--and Netflix ain't so small, either. Smaller than Walmart, sure, but not some itty bitty company.
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The future is...
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There can be only one
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reply
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I agree with comment #4
BTW I've been using Blockbuster Online for about 3 years and I've thought about trying Netflix out but other than the fact that Netflix seems to have faster shipping times (which is no big deal to me) what advantages does Netflix have over Blockbuser Online (FYI I'm only talking standard DVDs since I don't have High Def gear yet)?
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Netflix provides great service
But I'm consistently amazed at the quality service the company provides. I get a two day turn around, e.g., I mail it on Monday I'll get a new one on Wednesday. I have no problem getting new releases, the trick is to remember that they mail them out on Monday. And they've yet to nickel or dime me, which is quite common in US capitalism.
I tried Blockbuster and it would take no less than 9 days to get a movie to me, and well over 9 days for them to receive it back. I received an email three months after I quit notifying me that they had just received a DVD I had mailed back three months prior. That's beyond crappy service.
I do agree with Michael Long, however, that the future will be streamed and Netflix has to really jump on that. iTunes combined with Apple TV could leave Netflix in the dust. If iTunes is reasonably priced, has good quality, and the movie iTunes release date is not delayed too much.
I've heard that Hollywood will not allow iTunes to release movies until a month after the DVD release. If that's the plan, then I'd just rather rent from Netflix as it'd be much cheaper and higher quality.
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That's nonsense.
Amazon operates in the UK. Netflix operates in the USA. How do they compete?
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Re: The future is...
Sure, eventually. But for right now Netflix has found a profitable niche and staked their "king of the mountain" claim. In another year or few, when digital delivery of high-quality video to the average person becomes more practical, Netflix will be positioned well to leverage their name and market clout into that business as well. (After all, in the minds of teh average person, the only difference between what Netflix does now and digital delivery is medium.)
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Re:
I thought I was pretty clear on that, sorry if I was not. Amazon launched in the UK with the idea that it would learn how to do this and then come to the US with it. However, that plan clearly did not work.
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Re: The future is...
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Re: I agree with comment #4
Do you even know what the word "advantage" means? You admit that Netflix gets movies to you quicker. Which means for what you're paying for Blockbusters you could receive more movies. Which is another way of saying that Netflix offers better service at a better price.
But if you don't find better service at a better price an advantage, I'm not sure what "advantage" Netflix could provide that you'd like. Maybe Netflix could offer to come and beat you with a baseball bat every so often, would that be an advantage?
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No big suprise
1) Assuming that just because this little upstart company can do it, so can they. I'm sure a lot of people said "eh, it's a novel concept, but I don't think it'll last" when Netflix start up. Even though they're still around, that doesn't mean that it's easy to do.
2) Not offering anything new. You're entering into a market that is already well established by a single company. Then you ask everyone to use your service instead. But you don't give a reason why to switch. If some of the above-mentioned stories are true about the service you offer, you're giving reasons not to switch. And you're surprised that no one switched? Seriously... this is where innovation is not only a good thing, but absolutely vital.
Now... as far as the streaming business goes... I'm not sure that it'll really take off as long as it's tied to any one company's hardware. Yeah, iTunes is successful, but how many people shop it when they don't own an iPod? Now, granted, there's a whole heckova lot of iPods out there. But still, I don't see myself buying yet another gadget to hook up to my TV just to pay a monthly premium to stream a movie.
Yeah, you could hook your computer your tv... in fact most new HD tv's come with a computer-in port (I'm typing on one now) and stream thataway, but the vast majority of home movie watchers aren't going to know how to or want to do that. Most of them are going to have an older TV and not want to upgrade just to stream.
I'd be more impressed and hopeful if they offered a generic stream (that you subscribe to) but allowed the secondary market produce the hardware to put it on your TV. Then we'd see some competitive innovation... or just more patent lawsuits. :s
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Re: Re: The future is...
They are positioning themselves very well for the future market.
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Re: Re: I agree with comment #4
By advantage I mean is Netflix cheaper, better customer service, bigger selection, they don't intentionally put a hold on new releases so that customers have to wait a month before getting them...etc.
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Didn't Stand a Chance
I think AppleTV is gonna bomb. The average user doesn't have an internet connection fast enough to download a movie at high quality within a reasonable amount of time to have made it worth the effort. My girlfriend downloaded Zoolander through ITunes on her DSL service, took her two days and it looks like crap.
Goodluck with that, Apple.
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Off the mark
It seems this whole post has missed the point, the point is that Amazon US did once try to compete with Netflix and couldn't, that is now history. What has happened recently is that Amazon UK has tried to compete with LOVEFiLM.com and failed in a similar way it did with Netflix.
Netflix and LOVEFiLM are two separate company's on two different continents, are not in competition with each other. The only similarity is that they both rent DVD's in the post and have both put Amazon's DVD rental section out of business in there own territories.
More facts, less speculation would be a good start.
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The next upstarts
I think kiosks are the next thing to erode Netflix customer base as people get fed up with their inability to satisfy demand for timely mailing of new releases.
As for DVD's vs. on-demand, DVD's are here to stay for a long while. The Comcasts of the world are delivering low-resolution movies via On-Demand. They are not even DVD-quality! Fast delivery of HD or DVD qualtiy video over the internet direct to my plasma TV ain't gonna happen anytime soon. It will be years before that changes...also, I submit that "triple-play" (aka triple gouge) will die an ugly death...gov't regulation will come back into play soon.
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Inspiring
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rental business start up - guess rental software is the key
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Re: Netflix provides great service
netflix, intelliflix, blockbuster at http://www.onlinerentdvds.com/comparison.html.
Also provides information about online game plans They are also cover
latest news and reviews on http://www.onlinerentdvds.com/reviews.html.
...real cool check this out.
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