The mighty Amazon.com, Inc. (NASDAQ:AMZN) has infiltrated and disrupted a number of product categories before. The company has built up a significant digital media ecosystem through marketing its shrewd acquisitions through its line of Kindle devices. Amazon just might be on its way to dominating Internet video streaming with its array of offerings, as it looks to increase sales fromdigital media content.
Amazon.com, Inc. (NASDAQ:AMZN) has a big advantage over other online companies, as it has three different services and a massive ecosystem from its existing e-Commerce users, as well as a device strategy that includes millions of tablet users to cross-sell its content.
Amazon.com, Inc. (NASDAQ:AMZN)‘s wide array of Internet video services includes Amazon.com, Inc. (NASDAQ:AMZN) Prime, which is the firm’s 2 day shipping service, combined with unlimited video streaming, as well as the lending of eBooks. Amazon.com, Inc. (NASDAQ:AMZN) also offers video-on-demand services through Amazon Instant Video and LOVEFiLM.
One of the major bright spots of Amazon’s Instant Video is the showing of newer TV Shows and movies that are relatively recent, compared to other competitors. Using Amazon’s IMDB as a marketing medium, the company fills a gaping hole that other leading competitors like Netflix, Inc. (NASDAQ:NFLX) are unable to do. For example, a majority of Netflix, Inc. (NASDAQ:NFLX)‘s content is older than one year, which is a great plus for Amazon’s Instant Video service. Streaming shows that are barely one week old is a great value proposition for Amazon Instant Video and its rival Hulu.
However, usage of Amazon’s video offerings is not as smooth and can be confusing, as it offers quite a combination of videos and lists them all together. On the other hand, Amazon’s biggest rival in Internet TV, Netflix, Inc. (NASDAQ:NFLX), has a much smoother and easier to navigate user interface. Amazon’s content collection of roughly 38,000 titles is also much smaller than Netflix’s content base of more than an estimated 60,000 titles.
In addition, Amazon.com, Inc. (NASDAQ:AMZN)‘s international streaming subsidiary, LOVEFiLM, was acquired by the company in early 2011. LOVEFiLM has a strong presence in the European market, with more than 2 million members across the UK, Germany, Denmark, etc. Lovefilm has DVD offerings as well as an online streaming service, and boasts of more than 70,000 titles. Amazon doesn’t disclose the number of subscribers of its Prime and Instant services, but it is widely expected to fall in the 5-10 million range.
Amazon’s CFO has acknowledged that Amazon.com, Inc. (NASDAQ:AMZN) is investing heavily for the acquisition of video content through its LOVEFiLM business unit for the European market. Lovefilm is still slightly behind Netflix in terms of viewing and content library, in spite of similar pricing and a much earlier start than Netflix, Inc. (NASDAQ:NFLX).
The on-demand marketplace is much more crowded compared to the monthly subscription-based all-you-can-eat model of streaming. Cable firms are very dominant in the video-on-demand space. Consumers spent more than $1.3 billion for movies and other TV shows from their pay TV service, according to areport from NPD Group.
Cable companies like Time Warner and Comcast control roughly 56% of the VOD market, and satellite TV companies like DIRECTV and Dish Network controlled 27% of the market in 2012. This should not be surprising, because it is a lot more convenient to get a movie rental via the TV compared to switching online or ordering from a store.
However, Amazon’s direct competitors also have pretty significant content offerings in the on-demand space. Google has been increasingly ramping up its content offerings through Google Play, as well as through YouTube. Apple’s iTunes has a significant footprint in the on-demand movie category as well.