Amazon’s Unfortunate Streaming Video Plans

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If several media reports are true, Amazon.com Inc (NASDAQ: AMZN) will release a set-top box through which consumers can stream premier video content. Even with its huge customer base and tremendous brand leverage, the e-commerce company will come to the market much too late.

One of the lessons of new age media is that first into the market usually wins. The best example of that in streaming video is Netflix Inc. (NASDAQ: NFLX), which turned its DVD-by-mail business into a streaming video one. With well over 20 million customers, it has a commanding lead. It was followed by services from Hulu, Apple Inc. (NASDAQ: AAPL), Microsoft Corp.’s (NASDAQ: MSFT) Xbox, Sony Corp.’s (NYSE: SNE) PS3 and Wal-Mart Stores Inc.’s (NYSE: WMT) service via its VUDU operation.

All these service have to compete with the ancient cable and satellite services, which have had set-tops on home televisions for years. Companies such as Dish Network Corp. (NASDAQ: DISH) and Comcast Corp. (NASDAQ: CMCSA) have had tens of millions of customers using their services and these have evolved so that they include DVR and VOD features. Those services by themselves are a formidable block to entry for all of those that have come after them.

There is no telling within any consumer-based industry when the number of customer options becomes too great to support all of them. People usually do not have two cell phones, but often have three or four TVs. People may use several e-commerce sites, but they can pick and choose what they like on them, and may not buy anything at all.

Streaming video falls into another class. The basic service is almost never free, and the streaming video programs almost always cost extra. Most services have overlapping program libraries. It is hard to see how any one has an advantage over any other. That is except for those that have had market share for years.

Amazon is too late to the streaming video industry to have any success.

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