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Amazon’s recent pairing of video streaming with its paid Prime service has gotten a lot of people in the industry talking. Some are lauding the new service, while others are calling it a costly mistake by the online retail giant. The Hollywood Reporter is claiming in a fascinating article that Amazon’s streaming service wil turn out to be very beneficial—for Hollywood.

According to the Reporter, Amazon’s service is a boon for content owners and a bust for industry competitors for the following reasons:

1. Healthy Competition

Competition from Jeff Bezos’ Amazon and others will boost the cost of content and increase pressure to gain and retain streaming subscribers. This could help reverse damage to existing business models created by inexpensive rental providers like Netflix and Redbox.

2. Creative Windows

Just as cable fragmented the old broadcast TV audience, digital media will further fragment viewing audiences. Some subscribers want live content and the latest movies; others will accept a more limited library in exchange for lower pricing. Amazon’s service might lead some to consider whether free two-day shipping (a perk of Amazon Prime) will warrant abandoning existing platforms like Netflix.

3. New Pricing Models

…we are seeing more signs of variable pricing that would lower initial content-acquisition costs for new players while increasing the cost for established players. Content owners should favor this pricing dynamic because it hedges cord cutting/shaving risk, fosters more competition for their product and prevents any one distribution player from gaining a scale advantage…

4. Studio Control

Unlike packaged media, rights to digital content can only be acquired through deals with content owners. So each new player in the digital realm pushes the market further away from the harmful effects of the First Sale Doctrine in copyright law, which essentially allowed rental outlets such as Netflix and Redbox to obtain cheap DVDs and resell them even if the content owners objected.

Do you think Amazon’s new service has industry leader Netflix and other competitors concerned? Will Hollywood be able to benefit from the latest entrant in this crowded marketplace? Where exactly does Redbox fit into this rapidly changing business?

(via The Hollywood Reporter)

4 Responses to “Amazon’s Streaming Service Positive for Hollywood?”

  1. Member [Join Now]
    ChadCronin [chadcronin]

    I think competition is always a good thing. I like watching stuff on Netflix and I like using the Amazon streaming service especially for shows I want to own. I still want Redbox to rent Blu-rays from. The only thing I am over is DVD. I know it comes standard on alot of things, but if I am gonna settle for anything less than HD quality it’s gotta come @ a cheap streaming package cost or a free code.

  2. Member [Join Now]

    My concern however is that this analysis brings up a fear many here have had before. Competition is good if you are on the receiving end. Will competition be as good for the consumer as it will for the studios? the examples above worry me.

    Netflix will pay more since they are established? Why is that fair? Who will end up footing that bill, the subscribers.

    They want the market fragmented? That won’t help the consumer who now has to subscribe to three different services.

    It all boils down to the fact that the studios don’t want us to be able to see their product without paying full retail. They’ve hated it since day one and are continuing to work towards depriving us of content now.

  3. Visitor [Join Now]
    JBG [visitor]

    I’d like to see one good example where the consumers were forced to do something they didn’t want. Even with commodities that are outside the manufacturers’ control, like gasoline, and one without which you just can’t do (everyone has to drive), the consumer has full control, as evidenced by the much lower price of gasoline in North America, compared to most of the rest of the world. But when we are talking about entertainment, and one with a pretty low quality, at that, there is no way the studios will be able to dictate their terms. Especially, when (if ticked off sufficiently) you can get their product for free.

    • Member [Join Now]

      The problem isn’t people will actually be forced to subscribe to multiple sources or pay more. The problem is if they don’t they won’t get the video. The gas analogy is actually quite close. Gas stations price fix on regional levels. No one is forced to pay for gas but their price fixing does work anyway. People can’t give up on gas they can only limit it. The analogy further works because competition on the customer level is just an illusion. Really there is no competition because the refineries now have the power to do what they want to. There isn’t a Netflix to fight for us and keep the costs down. When the studios have more control over the delivery channels we all will suffer. There’s a reason the studios were one of the first companies to be hit with anti-trust laws.