This Means War

23 01 2011

In the 1980s, the big rage was the corner video rental store. Moms and Pops everywhere could afford to go into business, even though the VHS tapes often cost them $80-100 for renting purposes. At $3-5 per movie per night, it didn’t take long to recoup the investment. It was extremely low-hanging fruit.

Of course, the lure of profits attracted big business, which led to the Blockbusters of this world soon dominating the rental business. Mom and Pop were left wondering what the heck happened to their little corner of the market.

Which is probably what Blockbuster feels now that Netflix has sent it packing. Just try to rent a movie at Blockbuster in Amarillo. You will die trying.

As in all things technological, change comes fast and takes no prisoners.

So naturally, I was instantly intrigued today when I read that Amazon had finished buying out Lovefilm.com, the European version of Netflix. Which, of course, means war has been declared and lines drawn in the sand.

Netflix recently moved into the Canadian market. And rumors persist of Amazon launching its own US streaming movie service, while Netflix is eyeballing Europe.

Blockbuster who? Did someone say “dinosaur?”

Competition is great, but it’s going to be tough for Amazon to make inroads in the US given Netflix’ huge lead, as well as for Netflix to tap into Europe. But at the end of the day, I would place my bets on Amazon.

Why? Amazon already has good relations with Hollywood, while Netflix’ recent evolution from emphasizing DVD renting to streaming, has raised eyebrows. Hollywood was happy to work with Netflix as long as it was renting DVDs, but streaming changed the equation. As for Amazon, they have something Netflix doesn’t: a retail presence (albeit online only). Shoppers can still opt to buy the DVD, which positively thrills Hollywood. As long as Amazon can keep its relations a little bit muddied (and product lines diverse), they can probably keep Hollywood strategists at bay for a while.

Which will give it time to maintain its new European market, as well as try to gain a foothold in the US.

But does this mean Netflix will one day join Blockbuster in the dust bin of retail losers? Probably not. For the moment at least, they are king of the movie jungle. And competition will be good for us all, because it will likely result in a downward price spiral. Furthermore, Hollywood is going to have to wake up and smell the coffee. We are tired of buying, even renting, DVDs. Streaming is the future, for all digital content. I for one can live without any movie that Hollywood won’t allow to be streamed.

Because I have drawn my own line in the sand. Yep, this means war…between Hollywood and me, or whoever dares interfere with my viewing preferences.

As for the Moms and Pops of the 80s who once owned video rental stores, I hope that by now they have found something else to do. And Blockbuster? I’d say it’s time to tidy up the resumes and start looking.

I hear Amazon and Netflix are hiring.

Dr “What’s In Your Queue?” Gerlich

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