Amazon may buy Netflix

Accord­ing to Busi­ness­Week, Amazon.com is revis­it­ing an ear­lier plan to pur­chase Net­flix. Ama­zon Unbox has failed to attract down­load cus­tomers with its lim­ited library of Win­dows Media-based videos, so buy­ing an estab­lished atom-based ser­vice like Net­flix makes sense. Amazon’s model is based on sell­ing and ship­ping phys­i­cal objects. By link their cus­tomer pref­er­ences engine to the Net­flix cus­tomer data­base, Ama­zon could move merchandise.

Cus­tomers want their rental DVDs ASAP

Blockbuster’s recent Total Access ad cam­paign points out a grow­ing weak­ness in the Net­flix busi­ness model: cus­tomers are now accus­tomed to rent­ing movies in Inter­net time — even if that means dri­ving to the local Block­buster to swap a DVD.

It’s a nice twist, as a few years ago Block­buster was los­ing mar­ket share to Net­flix. Given the pathetic DRM that is baked into pur­chased video down­loads, most e-consumers will choose the DVD over a soft­ware media player.

Regard­less of the out­come, Ama­zon, Block­buster and Net­flix each need to counter iTunes’ dom­i­nant posi­tion in the US video down­load mar­ket. iTunes users seem com­fort­able with that deliv­ery method.

Tagged as: Amazon, Apple, businessweek, business_model, DRM, e-commerce, iPod, iTunes, market-share, mobile, strategy, USA, video, windows_media