Despite a somewhat sluggish US economy, online mega-retailer Amazon.com continues to thrive, and is expanding their range of goods and services. Amazon’s latest venture is an online streaming video on-demand service that will directly compete with Netflix.
On Friday, Amazon executives introduced the new service, which will allow customers to stream a broad range of films and television programs “on-demand” from their home PC or laptop computers. The news of Amazon’s foray into the streaming video market upset Netflix investors; there was an unexpected sell-off of Netflix stock in the marketplace Friday.
Obviously, investors are worried that a massive online retail outlet such as Amazon.com could effectively steal Netflix’s thunder, and capture a large percentage of the growing video on-demand market. So far though, the number of people streaming films online is still relatively small, but industry experts expect the market to grow substantially over the next 10 years.
Amazon appears to be trying to move in on a budding market before it takes off. Netflix is currently the biggest player in online video on-demand. The company has recently rolled out a set-top box to stream films wirelessly from the computer to their home television set. Whether Amazon plans to follow this business model remains to be seen.
The other big player in the marketplace is Apple, whose Apple TV has yet to take off on a grand scale, but continues to make small gains in the marketplace. Amazon’s move into the video on-demand field will increase the pressure on Apple, but a loyal Apple fan base may keep the service alive and kicking, even if Apple TV never reaches the level of mainstream success seen by other Apple products, such as the iPod or the iPhone.
One thing is for certain though; the days of driving to the video store to rent a film are coming to a close. As broadband Internet becomes more and more commonplace, even in out-of-the-way rural areas, delivering films via the Internet becomes cheaper, more efficient and quicker — a dangerous trifecta which spells nothing but trouble for neighborhood video rental outlets.
Amazon appears to be moving closer and closer to becoming an online media company, as well as the Web’s biggest retailer. Last year, Amazon launched their own MP3 store, directly competing with iTunes, Rhapsody and other online music outlets. At this rate, you have to wonder how long it will be before Amazon starts their own record label or film production company…
The new Amazon video on-demand service demonstrates very clearly that the company is no longer satisfied with “tinkering around” with online media distribution, but is taking it very seriously indeed. It will be interesting to see how the competition plays out, and what benefits, if any, it will bring to the consumer.
