Analyst: Amazon Eyeing Separate Streaming Service22 Nov, 2011 By: Erik Gruenwedel
With Amazon offering week-long Black Friday pricing on DVD and Blu-ray Disc movies, BTIG Research analyst Richard Greenfield believes the e-commerce behemoth is positioning its new Kindle Fire tablet as a Trojan horse to deliver TV programming into homes.
In a Nov. 22 blog post, Greenfield noticed that while Target and Best Buy aggressively promoted Black Friday deals for TV DVD bundles priced starting at $7.99 and $8.99, respectively, Amazon, in newspaper ads in select markets across the country, highlighted seven TV series, including three full seasons of “Arrested Development” and all eight seasons of “24” available for free to Amazon Prime subscribers.
Amazon’s $79 annual Prime loyalty membership includes free streaming access to more than 10,000 movies and TV shows. The e-commerce retailer did promote heavily myriad online TV DVD Black Friday deals.
Regardless, Greenfield says the subliminal message is that Amazon believes consumers are shying away from a-la-carte pricing for repurposed TV programming. Instead, Amazon is hoping strong holiday sales of the nascent $199 Kindle Fire create an established network of consumers inclined to embrace a stand-alone Prime subscription video-on-demand service rivaling Netflix.
Indeed, with tablets projected to be a big holiday purchase item, Amazon’s loss-leader pricing on the Kindle Fire (it’s losing more than $10 on each tablet sold, according to IHS) is designed to get the devices into homes and become a conduit for digital content distribution.
“With the launch of the Kindle Fire (enabling portability to Prime Instant Streaming) and recent content licensing deals by Amazon, we believe the stage is set for Amazon to become a more aggressive competitor in the [SVOD] business,” Greenfield wrote. “We continue to expect Amazon to separate its streaming video service from Amazon Prime (shipping) at some point over the next six months along the lines of how Netflix has separated its DVD service pricing-wise from its streaming video service.”