Can Amazon kill Netflix… and Spotify too?

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You might have heard the news by now – Amazon have just made a move that would be worthy of Francis Underwood in Netflix’s House of Cards – they’ve announced plans to rebrand their LoveFilm online streaming service and package it up as part of the Amazon Prime offering. If I were Netflix, I’d be watching my back.

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Since Netflix arrived on the scene a few years ago, there has been endless talk about how it is killing traditional TV – with every broadcaster from Sky to HBO rapidly building their own Netflix-equivalents to stay relevant… but as of yet there hasn’t been someone who could plausibly wield the knife.

Enter: Amazon. A few years ago they gobbled up LoveFilm here in the UK, whilst simultaneously launching Amazon Instant Video in the US. The two services have previously been kept relatively separate, though next week the LoveFilm brand will finally disappear and instead it will become a part of Amazon Prime Instant Video.

The offering seems quite clever: for the same price as Amazon Prime – £79/year – which many people already pay, customers will get not only free one-day delivery on Amazon purchases, and access to the Kindle lending library (said to be half a million books), but will also get the LoveFilm catalogue thrown in for free.

It’s clever, and reminiscent of how telecoms companies will offer “quad play” services: broadband, landline, TV and mobile packages in one… if you already pay for three of them, it’d be silly not to get the fourth one, right?

By the same token, if you already use Amazon Prime for Kindle or deliveries, then are you really going to sign up for Netflix if you can get LoveFilm for free? More worryingly for Netflix, many people already have Prime as Amazon regularly do offers on it, or will seemingly sign people up without too much fanfare (I’ve had Prime for a few years now… and I’ve no idea how I first got it).

It’s not all doom and gloom for Netflix, of course – there is still competition over catalogues. Like how no one else can have football rights because Sky have them locked up, film catalogues are eagerly fought over – and Netflix and LoveFilm seem to have almost parity in the quality of their catalogues. More pertinently, in the burgeoning original programming space, Netflix are by far leading in the field – with the likes of House of Cards and Orange Is The New Black… which will require Netflix if viewers want to watch. Though Amazon Studios are currently producing programmes of their own too – so they could soon be competing on this front too.

Perhaps more interesting is to consider the implications for other content providers. Amazon are also players in online music – currently only selling MP3s a la iTunes… but what if they were to create an unlimited streaming service and bundle it in with the Prime offer? Spotify would be dead overnight given they charge £10/month for just music.

Amazon could conceivably, with relative ease, offer books, TV, film, music and physical goods delivery all in one. Chances are some people would be (rightly) nervous about Amazon controlling all of their media… but money can speak louder than principles.

Amazon are already a juggernaut… but they could be about to get a whole lot scarier for other companies.

James O’Malley
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