Amazon It Strategy

Topics: Streaming media, Video on demand, Multimedia Pages: 10 (2970 words) Published: July 12, 2010
IS714 Final Paper|
Amazon & The Digital Media Industry
|
Emerging Trends & Recommendations|

Ramya Sugumar
Spring 2010
|

Contents
Emerging Trends2
1.Redefining the concept of TV & entertainment2
2.Streaming and portability across multiple devices3
3.Evolving ecosystem3
4.Cloud is the enabler4
5.Getting closer to the customer than ever before4
Amazon5
Strengths5
Opportunities5
Recommendation6
Technology6
Value Proposition to End-Users6
Implications – The New Ecosystem7
Key Partnerships and Amazon’s Value Proposition7
Who stays neutral or loses in the game?8
Pricing9
Revenue sharing9
Impact on other sectors10
Challenges10
1.Privacy issues10
2.Bandwidth10
3.Digital Rights Management11

The media industry has gone through huge changes in delivery channels, partnerships, technology and demographics over the decades. The one thing that has not changed and always evolved with the media industry is the importance of advertising. In fact, the contribution of advertising revenue to the revenue models of media providers has always been increasing. Emerging Trends

1. Redefining the concept of TV & entertainment
Television will no more be a box that airs movies, shows and news on a predefined schedule. Consumers, particularly young consumers, increasingly view the internet as their primary source of entertainment. This trend in attitude is the driving force between innovations that seek to merge the functionality of televisions, PCs, gaming consoles, smart phones etc. Players in this space, such as Roku, VUDU, and AppleTV, have focused on ways to facilitate the watching of downloaded or streaming movies on TV and channels like ABC and HBO make their content available on the internet where users can watch them anytime. As this trend evolves, devices that provide multiple functionalities will win consumers largely. Televisions that allow on-demand video streaming, 3D, live gaming, online shopping and quick browsing will wipe out the dumb boxes, just like smart phones that replaced traditional cell phones. In addition, companies like Netflix have expanded their business model to online video streaming in response to the decline in the purchase and rental of DVDs. This evolution is mainly attributed to the change in behavior of consumers who care more about what they want to watch than from what source or on what device. Players in this industry need to compete and innovate to reach customers through multiple channels and deliver quality video streaming

Statistics from Mintel - Digital Entertainment: Streaming Video - US - January 2010 Purchase and Rental of DVD| Declined from 81% in 2005 to 69% in 2009| # of videos watch online in US| Increased 237% from 12.7 billion in 2008 to 30.1 billion in 2009| Average time spent on online videos | 12.2 hours per viewer per month in 2009| Household penetration of smart phones| Increased from 8% in 2007 to 27% in 2009|

2. Streaming and portability across multiple devices
Consumers demand more value and convenience for their purchase. There is an increasing demand for portability across multiple devices. A user should be able to stream a video through Apple iTunes on her PC and be able to watch it on her car entertainment system while traveling. To add to her experience, her car entertainment will know where exactly she stopped watch the same video on her PC and will start playing from there. This is the internet of things in the media industry. 3. Evolving ecosystem

There have been three major trends in the digital media ecosystem: Move from pure competition to strategic partnerships
Recently, Netflix has signed up with Amazon to move its web technology to Amazon’s cloud, though it competes with Amazon on DVD rentals and video streaming. This is just one example where competitors partner with each other to grow together with industry and increase...
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