Amazon sets sights on American DVD rentals
Thanks to the expert reporting of Ms. Holly J. Wagner of Wired News for this one.
Amazon.com job listings for software engineers raise the specter of the internet retail giant entering the online DVD rental market in the United States, challenging companies like Netflix and Blockbuster.
Advertising for positions based at the company’s Seattle headquarters, the listings seek engineers to help in “building systems and algorithms that must move inventory between our fulfillment centers and our customers in a way that gives customers exactly what they want, when they want it.” The postings indicate they are specifically for an online DVD rental service.
That’s big news for folks in America, and bigger news for Reed Hastings and the Netflix crew. Amazon has many loyal customers who would probably be willing to try out their rental service if the price was right and the service was up to Amazon’s usually high standards. (If the job listing is an indication, it seems it will be.)
However, Netflix is positioned fiercely in the American market. They’ve already taken down the biggest corporation in the world, Walmart, and have sufficiently whipped rental giant Blockbuster into submission.
Wedbush Morgan Securities analyst Michael Pachter has some ideas of his own, however, at just how Netflix could be taken down a peg. Gang up on ‘em.
“Rather than beat themselves up trying to compete for no profit, they can pick up $1.50 a customer from Blockbuster at no cost,” Pachter said. Pachter said if a combined Amazon/Blockbuster service grew to the same size as Netflix, that could mean a $4.8 million monthly royalty for Amazon.
“Customers think they’re signing up with internet hero Amazon instead of Luddite Blockbuster,” added Pachter. “Both Amazon and Blockbuster win.”
And Netflix loses.
As always, Hastings isn’t worried.
“As time goes by and our competitive position strengthens, Amazon’s direct entry into the market seems both less formidable and less likely,” Hastings said. “With our volume of 1 million shipments per day, we can make money at a price point that no entrant can.”