Thursday, February 24, 2011

Amazon Prime Streaming Will Disrupt Netflix, Here's How | The Business Of Online Video

In 1998 Reed Hastings founded Netflix, the lar...Image via WikipediaAmazon Prime Streaming Will Disrupt Netflix, Here's How | The Business Of Online Video

It's been an interesting week for video streaming. Amazon is allowing us Prime members to watch about 5000 of their streaming titles for free, Hulu made a deal with the Criterion Collection (at least for the Hulu plus members), and Netflix made a $200 million content deal with CBS. I had a chance to test the free Amazon streaming and it was no different than Netflix, and the only difference (in principle) from Hulu was not having to watch the fucking ads (even if I pay for Hulu plus). I also cashed-in a rental credit with Amazon and watched Exorcist: Director's Cut offline. This was pretty cool except that the DRM license is tied to whatever monitor was active when you asked for the purchase (at least that is how Amazon explained my customer support inquiry  I have verified this behavior, whatever monitor is active when you start the movie will set the DRM and the movie won't be visible from any other devices even if they are HDCP compliant. Funny thing, you can open the WMV file from Windows Media Player and it works on both monitors!), so if you buy the rental from one monitor and you drag the movie to your second monitor, the movie doesn't play.

Except for that DRM issue, it worked beautifully and I am going to consider it as a worthy source of material if I can't pull it from Netflix. This is also a problem for sites that rely on bit torrent users *cough* pirates *cough* because in many times the rental price for a movie is a couple lousy bucks. I don't know about others, but for $2-$3 I would rather rent the movie than try to download it and risk the wrath of the MPAA legal machinery.

Image representing hulu as depicted in CrunchBaseImage via CrunchBaseThe question now is, is there room for Netflix streaming, Amazon Prime and Hulu plus at the same time? Well, let's see: Our Netflix and Hulu plus accounts are $8/month,  and Amazon Prime is less than $7/month. I am 100% sure that Amazon is losing money on my Prime account, I have a rule that anything I need to buy that is not critical (read: that I can wait two days for it) is automatically ordered through Amazon, and I almost never upgrade to next-day shipping. This means I can treat the Amazon Prime streaming as a real freebie, so even if I were to rent $8/month of content that still means a grand total of $24/month of combined spending in streaming media. $24 is maybe two DVDs on sale, or movie tickets for two adults for ONE movie, without any kind of in-theater snacks.

I don't even see all of this as a problem for Netflix, in reality it reinforces the business model that yes, everyone can make money with flat-priced streaming delivery. Well, the content license holders and the content delivery providers make money, and obviously the pipe holders make money too. The only ones that won't make money are the idiots still stuck in the old business model of selling overpriced obsolete plastic coasters. I guess this is good news for DVD collectors, because discs are only going to get cheaper at least until supply dies, then the only way you could justify paying anywhere close to what we now call retail price is going to be for premium discs, for example, rare editions, boxed sets, etc. Nobody in his right mind is going to pay $20 for a plain DVD.

Also, at $16/month it means there is still room for the premium networks to make deals with the streaming providers. HBO is already making some noise about the fairness of charging $20 for Netflix if it included access to HBO's library. That would be one hell of a deal but only if it includes access to all of their long run shows, not just a couple shows.

The one thing that is going to get harder is the idea that cable operators won't allow À la carte packages. What's my motivation to pay for 100+ channels when I only watch less than 20? Would somebody in the telco industry please build whatever the fuck is needed so cable operators can offer this kind of custom packaging within the current infrastructure? I am not asking for much, I just want the big three networks, whatever local network carries judge/trash talk reruns all day long, PBS Kids, and the documentary channels. I can live without the other 280 channels in my lineup. I can definitely live without the piece of shit video on demand that Comcrap inflicts on us.