Do you order a lot from Amazon?
Do you also watch streaming Netflix?
If so, then you are the unlikely target of Amazon CEO Jeff Bezos.
On Wednesday, he posted a memo on Amazon’s homepage asking you to pay $79 to get unlimited two-day shipping and access to over 1,000 movies and TV shows. It’s a strange combination, I know.
But, maybe this is the ideal customer…
I do order a lot from Amazon and I love Netflix, so the offer was pretty tempting. After all it is only $8/month, matching what Netflix costs, without the S&H bonus, haha.
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This subtle push by Amazon to enter the TV/Movie market could be considered a smart move. The cable industry is one of the largest in America with advertising revenue alone at $27 billion. If you add in subscriber revenue the grand total is $94 billion (source NCTA, Dec 2010).
That’s a heavy market, but right now Netflix is the “big dog” and they are following Apple’s iTunes playbook for industry domination:
Back in 2003, Steve Jobs opened up the iTunes store with a few music companies signed on and hoped for the best. Fast forward to today and the store has sold over 10 billion songs and brought in $1.4 billion in the last quarter (Q2 2011). It was a tricky path to success involving some cloak and dagger on Apple’s part. Offering the struggling music companies a new revenue source, while keeping the offerings limited enough to fend off any fears of lost CD sales.
Netflix is now in a similar position offering the studios a new revenue source in a time of need (falling DVD sales). Only putting online what they can and patiently adding more over the months. CEO, Reed Hastings, has even gone on record as saying that they are not competing for TV subscribers (the equivalent of CD sales for the cable industry).
Sounds awfully familiar…and everybody knows this is happening, but no one will talk about it.
Janko Roettgers (Twitter), my new favorite author, discusses this in his piece: Who are we kidding? Of course it’s Netflix vs. cable.
Ask Netflix about cord cutting…“It’s not happening, it’s not anything we are causing, cable and Netflix are complementary.”…Cable and Netflix are competing for the same eyeballs, the same money…
We are at the point of no return. Blink an eye and Netflix is on top pulling in billions. Perhaps, that is why Amazon wants in…I just wonder if this free shipping gimmick will work.
Amazon has been known to make major off-beat investments, but even this seems weird.
Still, I am very close to signing up, so maybe it is working…