Netflix’s Reed Hastings Says Amazon Is Losing $500M to $1B A Year On Streaming

COMMENTS (6)

• The reality is distribution is the least of the studios’ problems. Advertising sales have suffered and viewership has declined thus scaling back what constitutes a hit. The brilliance of the linear television model was exclusivity. Now that back catalogs can be streamed in their entirety from a half a dozen set top boxes, people can watch TV virtually ad free. If we can’t recapture the power of advertising then there will be no big bucks from second windows or syndication. The answer is out there, someone needs to create a dynamic advertising solution.

  Comment by Royce — Friday November 16, 2012 @ 5:46pm PST  Reply to this post

  • I’m glad to see that others recognize that a new approach to advertising is the missing link in the chain. Ads that people just want to skip/block are not the solution because technology will always give people the tools to do that with ever greater efficiency. Either the subscriptions need to cover the whole cost or the ads need to become far more effective.

    Pointing to the post just below this one, one solution is to have the store and the streaming service part of the same package. Amazon is in prime position to do just that, using the data they collect from viewers/shoppers to serve ads that are much better targetted and therefore not as obnoxious.

    Netflix is a trickier problem, not sure what they’re going to do. But one place to start is with their large customer base, which is in itself potentially valuable. Right now they’re not doing much with it, just letting people post and read reviews. If they develop the community features more, they could create a unique environment that people wold be more hesitant to leave.

    Comment by sffan — Saturday November 17, 2012 @ 11:50am PST  Reply to this post

• Isn’t this sort of apples and oranges? So what if amazon doesn’t make money off of its streaming service? That was never really the point. Amazon is a behemoth online retailer that makes money in several ways. They can probably afford to run streaming as a loss leader if it does the trick and incentivizes people to sign up for the very pricey amazon Prime service. They cover their losses, and they get a nice, predictable cash flow from all those lovely subscribers, a la pay cable, so have more stability for forward planning. Netflix is a one trick pony whose whole livelihood depends on the profitability of its streaming business and the loyalty of its subscribers, who can jump ship at any moment depending on which way the wind blows. Netflix can’t afford to lose money on streaming because streaming is all they are, and fickle, contract-free subscribers is all they have. Apples and oranges, no? Or did I assess this incorrectly?

  Comment by apples and oranges — Saturday November 17, 2012 @ 4:58am PST  Reply to this post

  • Amazon can lose some money, but if they are losing money on kindles sold, Amazon Prime video, some kindle books, and free shipping, sooner are later they are probably going to give up on some areas. They lost 274 million dollars, on $13.81 billion in revenue. They tested a monthly option for the Prime membership, but then stopped quickly. They may have done this, to cut some losses.

    Comment by Tvaddic — Saturday November 17, 2012 @ 8:12pm PST  Reply to this post

• Amazon’s selection is mostly British TV shows and foreign movies. There’s no way it’s losing half a billion.

  Comment by iggy agrimotor — Saturday November 17, 2012 @ 8:16am PST  Reply to this post

• Love the canned response from Amazon, says to me that Hastings hit the nail on the head with his estimates. Reading Amazons response you can almost feel them squirming.

  Comment by videozombie — Sunday November 18, 2012 @ 4:58am PST  Reply to this post