Tuesday, February 22, 2011

Amazon Streaming Video Service Has an Advantage

In business, it typically is advantageous when one competitor can afford to merchandise (give away) something of value that other competitors charge for.

Amazon, for example, now offers an instant video streaming service for its U.S. "Amazon Prime" customers. Amazon Prime is its $79 a year service which includes free two-day shipping for Amazon customers. The deal is that Amazon Prime members get access to Amazon's streaming service for no additional cost.

To be sure, Amazon's service currently offers unlimited, commercial-free and instant streaming of 5,000 movies and TV shows, where Netflix offers something on the order of 20,000 items. The Netflix streaming-only subscription costs $7.99 per month, which adds up to about $96 a year.

The point is that Amazon has another way to monetize its service, compared to Netflix.
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