Tuesday, February 12, 2013

Amazon vs. Netflix in Online Streaming

Amazon’s Prime streaming service has already grown into a huge rival of Netflix. Previous deals with TNT and a new arrangement with CBS, Amazon has made substantial progress in a short period. It is predicted that Amazon will spend more than $500 million on video this year.

This article also mentions how Amazon and Netflix are “mining the data of their users” to decide which shows to license.  Brad Beale, who is responsible for Amazon’s video acquisition, said that “Data is a great proxy for what customers love”.

Although Netflix has a longer history in video streaming or renting, when it comes to online streaming, I think Amazon has one thing that Netflix does not have – the variety of data that can be used for prediction. Predicting customers’ taste can be very tricky, because taste or preference of TV shows can change easily, and historical data may not tell anything about the fate of a new show. In short, there is a huge variability. Amazon can mitigate this variability by combining data from its online streaming service and book sales. Using its Prime membership service as the platform also gives Amazon an immediate access to a large amount of potential viewers.

Question to consider: What other strategies can be used to mitigate the variability of viewers’ preference?  


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