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)