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Owned Media or Media-on-Demand?

My use of owned media, items I have purchased, is pretty much dead. I have a collection of music and video that I have purchased over the years. But I don’t often use them. I instead opt for video and music on-demand from services like Redbox, Netflix, and Pandora. How often do I watch those DVDs that are on a shelf? How often do I play music from my library of mp3 files? Not often.

If there is a movie I really want to see, it’s typically available from an on-demand video service. I can rent and play three times before I cover the price to buy and own. That math works in my favor the vast majority of the time.

I do reference my library of music from time-to-time when I run outside. But now I can also substitute Pandora radio for a refreshed music list. I don’t mind the commercials so much and could opt for the subscription model and still come out ahead of buying to own.

My Amazon Prime 30 Day Trial Experience

Why I tried Amazon Prime.

I have a small obsession in my life; I want to ditch the monthly cable bill. The problem is, the other members in my family enjoy the cable service and want to keep it. So my quest for a lower monthly alternative to television programming continues year-after-year. To be fair, they consume more video content than I do. I’m sure the TV industry is thankful that my television consumption habits are in the minority. My family likes current programming offered by the networks and cable channels. They use both the cable on-demand service as well as a DVR to record content.

My latest test was the Amazon Prime service. At the end of the first 48 hours my kids told me they didn’t see any value in the service and my wife reminded me that she was right (again). She had told me before that Amazon Prime is intended to serve as a video supplement to television programming, not a replacement of the primary content source. Based on her expectations and viewing habits, I’ll say I have to agree with her.amazon-prime.jpg

To review the service I used several devices:

* A Samsung TV via ethernet hookup Amazon Prime App
* A Sony DVD player via ether hookup and Amazon Prime App
* An iPad
* A PC

 The Good.

The Amazon Prime annual fee is $79 and includes three services:

1. Free 2-day shipping on purchases
2. Free video streaming for select content
3. Access to the Kindle lending library

The shipping fee scales well for high volume internet purchasers. If standard delivery is typically around $6 then you would break-even after 13 or so purchases while getting a faster delivery. (Read how Amazon prime is very profitable for Amazon). I didn’t sign-up for the trial based on the shipping feature, but for many consumers this is the primary draw to the service. We did take advantage of the free shipping with a few purchases during our trial period. But in general I don’t purchase items online where I have to have 2-day delivery over standard shipping. I’m content to have standard delivery. Associating the 2-day delivery service with Prime is a brilliant marketing program and is generating millions in profits for Amazon.

At $79/year that is $6.58/month which is better than NetFlix at $7.99/month. Plus you get more with the Amazon subscription. To be fair to Netflix, should compare content libraries. But, agreements with studios aside, the services are similar.

I own a Kindle and do occasionally purchase books from Amazon for it. I also use my public library from time-to-time. I like this feature as an alternative to buying books that I’ll read once and probably never touch again.

The quality of the content on the high definition streaming was excellent. I had minimal issues with disruptions of the stream.

There were no commercials for television content. We streamed an episode of Grimm Season 1 commercial free to test for this. Similar to mindset of a paid music subscription, consumers expect if they are paying for the service then they can see it advertisment-free.

It is possible to start consuming content on one device, pause it, and then resume on another device.

The Bad.

Most of the videos included with Prime are old. Maybe that’s the point. Is this just suppose to be a digital library? If so it’s certainly better than buying videos, watching them once or twice and then sticking them on a shelf. But if you are looking for recent movies like what you find at Red Box, they are not included as part of the Prime subscription. You can buy or rent those movies for additional fees.amazon-prime2

Access to television shows are tied-up with network contracts. I went to see a season 1 episode of NCIS from 2003. The only option is to buy episodes. Yet Grimm Season 1 from 2011 is available for free streaming for Amazon Prime members. Access to same season episodes is available for purchase. I should note that we can get access to current television programming via the cable on-demand service.This single limitation is the main reason why Amazon Prime isn’t a cable replacement alternative for my other family members.

I was able to define a watch-list using my computer for content that I wanted to queue for later viewing. But the two TV devices I have don’t show the watch-list from their console. It appears this is for computing devices only.

The Ugly.

The Samsung TV and Sony DVD player GUI is a bit clumsy and slow. I found the best way to get something was to just type it in the search box. The Samsung TV interface was extremely sluggish on response time. This may have more to do with the age of the equipment.

Some closing thoughts.

Could this replace cable TV? For me yes. I don’t watch much television programming and if I want to see something current then I can typically find it on the web site of the provider. But I couldn’t help thinking that services like this change the model of video consumption. It’s not as easy to “channel surf” with no real goal in mind. In most cases you have to make a deliberate decision to watch content because changing content takes longer than changing channels.

I think the financials of Amazon Prime are a good consumer deal if you are willing to lock into Amazon for your retail purchases. My experience is that this is not a bad thing because for commodity items, Amazon often has the lowest or close to the lowest pricing. The shipping component for purchases is the way to get payed back for the subscription fee. The free video content is just an extra nice-to-have, and should not be a primary consideration of paying the subscription.

I’ll most likely cancel the service before the 30 day trial completes. It didn’t satisfy my video content needs (getting rid of cable) and I don’t know that I want to lock into the Amazon retail experience to feel like I’m paying myself back for the subscription price.

My war against the cable television bill continues…

Netflix raising Blu-ray rates

Last week I wrote a post about mail order alternatives to cable and satellite TV.  This post included information about Netflix services which includes the selection of television series in addition to movies. The Los Angeles Times reports that Netflix will raise Blu-ray rates effective April 27.  The subscription plan that allows 3 movies at a time will increase from $17 per month to $21 per month.

The justification listed by the company spokesperson is that this brings the premium fees for Blu-ray in alignment with other like services (in store rentals, purchases, etc.) as well as additional fees charged by Hollywood studios.

My local cable company is charging an extra $5 / month for high definition cable. So this price increase is in-line with market pricing for similar services. It seems strange that Netflix didn’t price the premium into the service at inception.I took a quick look at their 2008 annual summary to see if they were feeling effects of churn and trying to make up for lost revenue. Netflix defines churn as:

Churn: Churn is a monthly measure defined as customer cancellations in the quarter divided by the sum of beginning subscribers and gross subscriber additions, then divided by three months. Management reviews this metric to evaluate whether we are retaining our existing subscribers in accordance with our business plans.

But the annual report shows that the 2008 annual churn was at 4.2% which is in alignment with the previous two years.  Their gross margin has been slipping, so this could be a move to elevate that number. As analyzed in my earlier post, the $21 price is still a bargain if you use Netflix as a substitute for full cable services. With a single in-store rental at Blockbuster now at $5, the Netflix pricing is at 4 single rentals.

What’s your take? Do you you use Blu-ray? Is the better picture worth the price premium? Do you think this is a wise move from Netflix?

Have you ditched cable and satellite TV? Mail order alternatives

It’s 2009 and just like you have alternatives for how you listen to music (radio, satellite, CD, digital player, etc.), there are a growing number of alternatives for how you watch video content as well. Gone are the days when you were restricted to watching video on your television from cable or satellite. You’ve got choices now for free or subscription based content delivered through your Internet device or from a home subscription service. This can make a big difference in your monthly budget. Right now I pay $52 per month for expanded basic cable TV (No movie channels, No High Definition, No DVR, yaddy yadda.) That’s $624 annually for 100 channels of programming of which I probably view 10-15. There’s opportunity for cost savings for sure. But what about buyer utility? What about choosing the content I want to see?

In this post I’ll take a look at mail order alternatives from Netflix and Blockbuster.  I’d like to look in general at how  these programmers are marketed and at the difference in features.  In a follow-up post, I’ll look at free online streamed content.


I found that Netflix focuses on two primary features in its online Marketing: The ability to have unlimited rentals each month and its ability to stream content to your PC or TV at no additional cost. They are a few mentions of television episode programming as well. I think this will become a larger feature for them in the future as they compete with traditional television and programming. They also heavily promote the speed of the turn-around service you receive for DVDs.


Blockbuster focused its marketing effort on promoting the fact that they have a mail-in option that can be combined with in-store returns and exchanges. Their subscription plans vary with the fee for exchanging in a store versus a mail-back. They also promote the ability for just a simple return to a store which releases the next mail-order DVD in the mail to you.

Feature Comparison

Feature Netflix Blockbuster Online
Shipping Free shipping both ways Free shipping both ways. Additional option to return to store for exchange for discounted rental.
Television Programming Yes (limited over 5,600 DVDs) No
Movies DVD and Blu-ray DVD and Blu-ray
Streaming to PC Yes (limited selection) Yes with Movie Link
Streaming to TV Yes, with converter device (limited selection) Yes, with converter device
  • Unlimited $8.99 month 1 DVD out at a time. Unlimited online content

  • Unlimited $13.99 month 2 DVDs out at a time. Unlimited online content

  • Unlimited $16.99 month 3 DVDs out at at time. Unlimited online content

  • Limited $4.99 1 DVD at a time and limited to 2 per month. 2 hours per month online content.
  • Limited $3.99 1 DVD out at a time, 2 per month, $1,99 in store exchanges.
  • Limited $9.99 1 DVD out at a time, 2 DVD per month, 2 free in store exchanges, $9.99
  • Unlimited $16.99 2 DVDs out at time, 3 in store exchanges.
  • Unlimited $19.99 3 DVDs out a time, unlimited through mail, 5 free in store exchanges.
Contract Required? No, cancel at anytime No, cancel at anytime
Free Trial Yes, One Month Yes, two weeks

So what’s your experience with either of these two services? How is the customer service? What is the quality of DVDs received in the mail?