• 08.30.11

Amazon “Primed” To Compete With Netflix

Amazon has created one of the most viable alternatives to Netflix. But where is its streaming service heading? And how far is Amazon willing to take it?

When asked whether Amazon might ever consider Netflix-style DVD-by-mail subscription plans to complement the company’s Prime Instant Video streaming service, Steve Oliver, Amazon’s director of video for both digital and physical products, pauses for a beat. “We’re always looking for ways to respond to what customers are looking for…We are always looking at opportunities that may exist, but I don’t have anything specific to announce on that front,” he says.


Pressed further, Oliver remains diplomatic. If Amazon customer feedback indicated a strong interest in a DVD-by-mail service, would Amazon consider such a program? “I can’t really speculate on the hypothetical,” Oliver says. “We’ll just continue to listen to our customers, and allow things to evolve based on their feedback.”

The question, however hypothetical, is important for an industry that’s trying to determine where Amazon fits in. The company has created one of the most viable alternatives to Netflix, launching a streaming subscription service in February for its Prime members, who pay $79 per year to access the service. It’s less expensive on a monthly basis than any plan available from Netflix–and Prime subscribers also earn free, two-day shipping.

Earlier this month, Amazon nearly doubled its streaming title catalog to more than 9,000 movies and TV shows, thanks to content deals with CBS and NBCUniversal, and has expanded the service to hundreds of Blu-ray players, set-top boxes and other devices (e.g. Roku, TiVo). Where is this service heading? And how far is Amazon willing to take it?

“We’ve been growing steadily since launch,” says Oliver, who declined to reveal numbers surrounding usership. “We’re looking to expand and continue to grow our title count, and improve the benefits that we offer our customers.”

Many wonder whether that direction could pit Amazon directly against Netflix, and make Prime Instant a “Netflix Killer,” a misleading term critics too often apply to competitors in this space. The issue is that for any company to come within reach of Netflix, especially in streaming video, it would have to aggressively expand its content library. Netflix is known for pushing expensive content deals with studios or networks such as Epix, Relativity Media, and Starz. Would Amazon be willing to spend what it takes to grow its streaming catalog like that?

“We’re not really targeting a specific number,” Oliver says. Instead, he explains, Amazon’s tremendous data allows it to make more strategic decisions about the content deals it strikes. “We have the advantage here at Amazon of many, many years’ worth of DVD sales, in addition to our Amazon Instant video sales,” Oliver says. “We know what our customers like and what they’re interested in–we use that [data] to inform our selection decisions–the content that we think [subscribers] would enjoy seeing on the Prime Instant video program.”

Oliver declined to comment on the company’s mobile plans, or about whether Amazon will ever offer a separate online Prime Instant service, independent from Amazon’s other offerings (VOD and DVD sales).


When speaking with Oliver, I got the sense that Amazon is less committed to its streaming service, and more committed to its online shopping program. For now, to become a member of Prime is to get access to free two-day shipping, which drives retail sales not media streams via Amazon. Adding streaming content to that program might attract Amazon customers to Amazon Prime–but it does not necessarily draw them away from Netflix (or any other streaming media service).

“It’s certainly a benefit to the Prime program,” Oliver says. “We know that customers have responded very positively to Prime, and the benefits we have on shipping. It’s really about helping customers get the products that they want, as quickly as they can get them.”

As much as Amazon might like to frame the issue that way, its customers would be hard-pressed to buy Netflix gift cards, for example, or the Netflix Android app on Amazon. By contrast, features links to Netflix.

“Having free two-day shipping on millions of items helps our customers–streaming is yet another extension of that,” Oliver insists. “We now have products that are available instantly.”

[Image: Flickr user MDVerde]

About the author

Austin Carr writes about design and technology for Fast Company magazine.