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AMAZON.COM instant video
ryan fernando . jason zijlastra . melissa lew . kristina ong . anastacio galicia . fiona wang
Largest Online Retailer Founded in 1994 in Seattle, Washington by Jeff Bezos Tech innovations and superior online knowledge contributed to growth Online streaming part of Amazon Prime for students
What’s Amazon Prime? $79/year, free two day shipping
Instant streaming of 41,000
movies and TV shows
350,000+ Kindle titles to Amazon Prime for students
For students, free for 6 months,
$39.99/year after
What’s the problem? Inability to increase market share in the instant video market
Although Amazon offers a huge variety of items for customers to purchase
from their store, they lack in variety for their video
streaming service.
Current Situation
Netflix, 32.25%!
YouTube, 17.11%!
HTTP, 11.11%!
BitTorrent, 5.57%!
MPEG, 2.58%!Hulu, 2.41%!
iTunes, 1.90%!SSL,
1.89%!
Flash Video, 1.48%! Facebook,
1.48%!
Amazon, 1.31%! HBO GO, 0.34%!
Top Online Video Downstream Sources First Half, 2013
External Environment
LEGAL: website, video content, copyright issues
TECHNOLOGY: video quality makes online streaming
sites popular. HD will increase demand.
Five Forces Model
Rivalry Among Competitors
1. High 2. Netflix, Hulu,
Redbox
Threat of New Entrants
1. Medium 2. High capital requirement
Bargaining Power of Suppliers
1. Medium to High 2. Limited Number of
Suppliers
Bargaining Power of Buyers 1. High
2. Revenue based on customer sales; weak
loyalty
Threat of Substitutes 1. Medium
2. Many substitutes such as rental DVDs,
Apple TV, etc..
External Environment OPPORTUNITIES
Use brand and loyalty to gain market share
(buyers)
Strong capital base to get more content
(new entrants)
THREATS
Intense competition from Netflix, Hulu
(rivalry among competitors)
Pirated content from
illegal sites (legal factor)
Internal Environment WEAKNESSES
• Not known for
online video streaming
• No language
options, weak content
• Slow in releases • No original content
STRENGTHS • Strong name, well known brand • Strong presence, online retailer • Amazon Prime very popular
Internal Environment RESOURCES & CAPABILITIES • Abundance in Storage Physical Warehouses • Innovation - Amazon Prime Air
CORE COMPETENCIES • Ability of Superior Customer Service • Sophisticated IT systems to provide the
largest selections of items
Although Amazon offers a huge variety of items for customers to purchase from their store, they lack
in variety for their video streaming service.
Internal Environment RESOURCES & CAPABILITIES • Knowledge & Informational Resources • Product Management
CORE COMPETENCIES • The ability to utilize strong customer
knowledge and understanding to develop superior quality goods and services.
Can this be leveraged into instant video to
provide sustainable competitive advantage? YES
Internal Environment VRIO ANALYSIS • Valuable - Experience serving 152 million
customers • Rare – Experience successfully launching
services vertically and horizontally • Imitate – Advanced IT systems, human
resources, capital • Organized to Capture Value – Over 51,000
employees. CEO 2012 Businessperson OTY
Strategic Analysis INTEGRATED COST LEADERSHIP / DIFFERENTIATION
• Premium Products at Non Premium Prices
• Leverage Core Competencies
• Provide More Value to Amazon Customers
• Ex. Kindle Fire ecosystem, Prime
Offer Original Content HOW? Creating Production Studio FEASIBLE? More and more people are leaving cable
End Result • Increase Market Share in Instant Video Market
• New Prime members and increased value
• Quality