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.
I guess Netflix is phasing out their disc service because it seems to be a US-only thing while they are aiming to be an international video streaming provider.
Amazon streaming service seems to be only available in the US while Netflix is aggressively expanding internationally. Netflix also makes it really easy to circumvent their region coding system to get an access to their full catalogue.
While online streaming services have been available for ten years they all have been either too expensive or had too small catalogue or both. From my point of view Netflix is the first real alternative to pirating in my region. I expect them to capture the same kind of popularity as Spotify did. They still suffer from having very few finnish titles but they are shaking up the status quo here.
Amazon has yet to offer their alternative internationally. And if Netflix can capture people as well as Spotify did, Amazon will have very hard time convincing people to switch
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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[ 4.6 ms ] story [ 24.4 ms ] threadI'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.
Amazon streaming service seems to be only available in the US while Netflix is aggressively expanding internationally. Netflix also makes it really easy to circumvent their region coding system to get an access to their full catalogue.
While online streaming services have been available for ten years they all have been either too expensive or had too small catalogue or both. From my point of view Netflix is the first real alternative to pirating in my region. I expect them to capture the same kind of popularity as Spotify did. They still suffer from having very few finnish titles but they are shaking up the status quo here.
Amazon has yet to offer their alternative internationally. And if Netflix can capture people as well as Spotify did, Amazon will have very hard time convincing people to switch
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.