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Wednesday, December 01, 2004

Showtime at Amazon - Bezos Plans For Movies At The Website

The Amazon.comWebsite recently began running a series of five short films produced by Tony and Ridley Scott, with stars including Minnie Driver, Chris Noth and Daryl Hannah. This will help cap off Amazon's first decade, which now has the e-commerce flagship raking in more than $5 billion a year and making a profit. The digital superstore, which originally sold just books, now hawks everything from plasma televisions to hockey socks. In an interview with Newsweek Bezos, explains the idea behind the business and the value that customers could get out of this line of business from Amazon. Excerpts(With edits and my views added):

On the idea behind Amazon Theater - Historically, we do something around the holiday time to give some kind of free gift to customers. And so there's a win for Amazon, because it drives traffic to the Web site; there's a win for the customer, who ends up getting this free content. Then there is a win for the celebrities. They all get boutiques, so you'll be able to find the complete collection of Minnie Driver films, for example. And if films prove to be popular, we might do different experiments with independent filmmakers.

On selling media content online like Apple - Everyone from Wal-Mart to Microsoft is doing it now. It is still very early, and there's still lots of improvements that can be made to that experience. Certainly music is a part of it, and it is an area that we're very interested in. We do not want to do a me-too offering that wouldn't really add any value.

On competing against Netflix with a subscription movie-rental model - we do believe we're well positioned to do that business. Look at the churn rates in that industry, and you look at how many customers they have to acquire to get a new customer acquisition, and do that math. A substantial fraction of the monthly subscription fees are being paid out in the form of customer-acquisition costs. We could do that at significantly lower cost, and pass on all the savings in the form of lower prices. we also avoid TV advertising costs. Instead, we provide, Lower prices, and in particular, free shipping. Worldwide, the amount of dollars that we're spending on that is very, very heavy—much more than we were ever spending on TV. We believe we're much better off taking that money and giving it to customers instead.

On projections for fiscal2005, and the view that make it look, they were pretty good for a retailer but not high enough for an "Internet company:" - We're very different from traditional retailers in a whole bunch of ways. We turn our inventory 17 times a year, which is off the charts compared to even the best retailers in the business. We have a very large number of talented software engineers and computer scientists, and that is the wind that fills the sails of our business. So we are both a retailer and an internet company.

Holiday Season - expect to have a record holiday season. This will be our 10th, and every one has been bigger and better from a customer-experience point of view than the one prior and this would be true in Amazon's case as well.

It is generally beleived that Business model and excellent execution are the key to enduring success - Amazon seems to have got this right in the past and is only getting better and better in these two -Success has to follow in large measure.
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Sadagopan's Weblog on Emerging Technologies, Trends,Thoughts, Ideas & Cyberworld
"All views expressed are my personal views are not related in any way to my employer"