With the recent rollout of its Prime Instant Viewing service, Amazon is positioning itself to take on streaming leader Netflix. The move, according to one analyst, could turn out to be a very costly blunder by the online retailer.
Brian Pitz, an analyst with U.S. Bancorp, has lowered his rating on Amazon’s stock from “buy” to “neutral”. Pitz believes that costs associated with its new streaming business could cost Amazon as much as a quarter of a billion dollars.
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What do you think about Pitz’s dour assessment of Amazon’s new service, Insiders? Will the company be able to beef up its streaming catalog to become more competitive with Netflix, forcing Pitz to eat a bit of crow?
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Or is Pitz spot on with his pessimistic take?
(via Home Media Magazine)
This is something we have wondered about. Streaming is expensive, will it be worth it. I can tell you from my free month of Prime they don’t consistent bandwidth and it’s only downhill from here.
That’s the exact reason why I’m not holding my breath for Redbox going into streaming. That maybe why no partner has come onboard too. RB only survived due to the low pricing the studios gave it before and still do, of course with added conditions now.
When it can’t afford $20 wholesal dvds then it certainly can’t afford the high prices studios want for streaming. Isn’t that the reason why DirecTV and Dish Network charge $5 per vod movie? Even Netflix is sweating the Starz price. Starz went from being $30M a year to $200M a year.
I just sooner expect Netflix to raise their price to a flat rate of around $50 a month, like DirecTV, and just become a watch months old movies/shows whenever you want.
Part of the Redbox dilema is that there are no partners left. Most analysts have been looking at full service solutions. Companies with both infrastructure and content. If someone has both then why would they want the Redbox name. Redbox needs someone like Starz or Epix. I cant think of anyone with the type of content that they would need. Even HBO and Showtime wouldn’t work and those would be super expensive.
I think Amazon is even going to be in the same boat. It’s one thing to have the PPV view deals but when they ask to make stuff “free” the content owners are either going to balk or ask huge sums. Especially since they are advertising it as free. Studios hate that word.
I think Pitz’s review of neutral is correct “wait and see”. I dont see the titles there Im interested in .I also got an offer for a free month yet reluctant to even use it. They definately need more streaming titles to compete, however Im still an amazon customer, still buy items and may use their VOD service again when items present themselves .
REDBOX streaming would be great ,but if they are going to price it $3 like amazon does for rentals then I would stick with the machines.
NETFLIX is good and Im glad they do have STARZ since it has my show SPARTACUS. As long as they continue to have that Im happy. I do view the same concern as the previous poster and about future costs. They did add more customers and will get more as long as the content continues on. We all hope that more users will hold the price down.
Im streaming BIGSTAR TV, along with NETFLIX ( suspensions for a month or two when content decreases) and pretty happy with that ,especially when I can throw in a dose of REDBOX or VOD. Please dont raise prices..and I will keep singing your praises.
Amazon just needs to bring in HBO streaming, offer monthly subscriptions and then we may have a winner.