Wednesday, February 2, 2011
Amazon Encroaches On Netflix
As discussed in this article, Amazon is going to start streaming movies and TV shows online to its customers. This is great for Amazon since more and more people want to watch television online now, but it's not so good news for Netflix. Netflix has done a great job building itself up with online streaming of movies, home delivery, and no late fees. Most importantly, it beat out its biggest competitor: Blockbuster. Netfilix had a very strong hold on online streaming, but Amazon coming in could change all of that. It would be really convenient for consumers to get their books and movies all in one place. That would give consumers a good substitution for Netflix, especially if Amazon is cheaper. Substitutions equal a decrease in quantity demanded for Netflix, which equals a decrease in profit. Since Netflix has a larger selection and an HD option, I don't think Netflix will be in major trouble. But as Amazon develops their new idea, Netfilx will have to find something to stay in the game.