I have been using Netflix for years and we have all seen the train wreck from its decisions to modify its business model. But, did Netflix really modify its business model or just try to change its pricing?
I have been a loyal Amazon Prime subscriber as well. I have a Kindle Fire so now it is much easier to watch Amazon Prime free streaming videos. One the things that just hit me is the different business model for Amazon Prime than Netflix.
With Netflix you pay for streaming and you get a bunch of free videos. If you want videos not included in the free streaming you put a request in for the DVD. So Netflix wants you subscribe to both streaming and DVD delivery.
Amazon Prime you get free videos. You find free videos, and when you don't see what you want there are a wide choice of daily rentals $.99 - $4.99 a day to watch a video. If you know you like a video you can choose to buy the streaming content or buy the DVD.
Amazon is using streaming video to keep the eyeballs coming back to rent or buy content, operating like a retail operation. Amazon Prime video is keeping the users coming back on a regular basis and trying to up sell the users. There is a much bigger upside for Amazon Prime, than Netflix. A fanatical Netflix user will choose the 5 DVD rental option with blu-ray, but that same fanatic will incur a high monthly cost for postage, handling, and content. A fanatical Amazon Prime user will rent and buy videos and almost certainly buy many more things on Amazon Prime's store. The upside revenue for Amazon is much higher than Netflix.
And the beauty is Amazon Web Services is making money from Netflix operations as well.
Think of these business models as changing things were data centers are at the core of a strategy. Streaming is also a much greener strategy than physical media. How DVDs do you have sitting around your house? Don't you wish they were all in the cloud on demand?