Fast Company

Amazon Now Supplying "On Demand"

Yesterday, Amazon introduced its new on-demand, online store for movies and TV shows, called “Amazon Video on Demand.” Supposedly, Amazon’s new repository will operate much like a cable-on-demand service, offering customers access to more than 40,000 titles in streaming digital video. I say “supposedly” because the store is still in beta and will only be accessible to certain invited Amazon.com customers--until the store officially opens to the public later this summer.

Unaware that there was an "exclusive" list, I visited Amazon.com to take the beta service for a test drive, only to find this message: “The Unbox Beta Program is Currently Full.” Obviously, I wasn’t an "invited member," which is a shame considering my participation in the so-called “media.” I also hear that Amazon is giving its test-subjects, I mean invited customers, a $5 credit during the first few weeks of beta testing to encourage traffic. On principle, I am all for $5 credits, really, credits of any kind. FYI.

The coolest feature of Amazon On Demand is that you don’t have to wait as video files are downloaded to your hard drive, like you once did with Unbox, because the videos are now streaming. Nor do you have to download any "special" software to watch the videos. The streams never reach your hard drive, meaning no download is required and they don’t take up space. These features definitely set the store apart from iTunes’ AppleTV, the Netflix player, and the previous iteration of Amazon Unbox. After all, once you pay for the streams, instead of storing them on your hard drive, Amazon keeps the videos you've bought in the clouds—like everything else these days. The clouds take form in what Amazon is calling “Your Video Library”—the same place purchased videos will be stored so that they can be watched again. Of course, if you’re just renting, the videos hang out for 24 hours, before magically disappearing.

Another cool feature of Amazon On Demand is that it allows you to watch streams from a number of different devices, portable and stationary. And it’s even compatible with Macs and PCs.

Unfortunately, the cost of the streams has yet to be announced, but it seems likely that Amazon will offer them for $1.99 or less in order to undercut iTunes and encourage viral traffic. If Amazon is able to offer “new releases” at $1.99 and, say, a catalog of older films for $0.99, then this could – in my opinion – sell very well. Perhaps even like hotcakes.

For cinophiles, combine this feature with your Netflix Watch Now service, and you’ve got all the movies you need with little space lost on your hard drive. Not a bad deal.

A few things to note: Given Disney's close relationship with Apple and Pixar, and by extension Commander Jobs; Amazon won't offer content from Walt Disney or its subsidiary, ABC. Which is certainly a bummer, if you’re into that whole animation thing. Or Lost. At low prices per movie, and having paid some heavy licensing fees of their own to the studios, not to mention the debt leveraged to enable streaming video dependability, Amazon On Demand is not expected to be lucrative in the short run. To offset what these costs do psychologically to stockholders who just read the numbers, Amazon has made some other, fairly loud, product announcements in the past few days. It seems that Amazon is willing to take an initial hit on earnings in the hopes of seeing the service’s long-term success. Considering their earnings are about to be announced to stockholders, you can see why they’ve made a point of making a barrage of product announcements and have hurried the release of Amazon On Demand.

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