eBook Subscription Part 1: Will It Change Publishing?

Many new eBooks services are setting themselves up with claims to be the next Netflix or Spotify. They aim to be the subscription service for eBooks. But are they just dreaming and hoping that there is a market? Are they truly aligned, or are they adrift of consumer demand? The pundits and soothsayers all have their opinions, but does anyone really know, or are they merely playing to their respective audiences? The truth today is that no one knows and a gut feel is just that – a gut feel.

Today we look at the digital subscription marketplace and its potential impact on tradition publishing. Tomorrow, we shall look at some of the many new players, their segmentation and offers. We will finish by offering our thoughts on the potential opportunity, the potential winners and losers.

What we do know is that subscription, on-demand streaming services such as Spotify and Pandora are seriously challenging the traditional music market and raising many questions over creator rewards, the music value chain and business models. The music business’s challenges may have started with the P2P services such as Napster, but today’s streaming subscription cloud based services have the potential to challenge and change from inside the industry in a way Napster never could. The big music production players bought early into the likes of Spotify and are tending to control its impact on their businesses, whilst others outside the tent often remain not so well off. Artist often complain that they hear their music, but often can’t equate it to the reward received. Many of the economics of the music industry are slowly now being questioned by the emerging subscription models and as a result are starting to be rewritten.

Netflix is not alone in introducing change to the film and TV Home Entertainment market and has joined a number of other players who are now reshaping what was once a very predictable market. They are not only challenging the distribution channels, but also the content and its funding and creation. Netflix’s production of ‘House of Cards’, Amazon’s ability to convince the BBC to produce a third series of their ‘Ripper Street’ having previously publicly dropped it and Sky’s exclusive productions are some of the examples in a shift in content creation, funding and power.

Many today still can only see the consumer proposition, but as demonstrated, subscription models start to challenge what is produced, how it’s produced and funded and who is the driver within the value chain.

The reality is that we live within a publishing value chain where there are two constants; the author who creates the initial value and the Consumer who buys, validates and values the end product. All the rest are only there as long as they add, or are perceived to add, value. Anyone who doubts that, need only look at the self-publishing value chain and the amazing position Amazon has been allowed to create, or at the traditional bookseller and how their offer has to now be supplemented in order to compensate for their perceived lack of range and higher pricing.

So what makes subscription models potentially attractive to consumers?

If you consume lots of stuff, then the obvious subscription benefits are around convenience, price and range. This works well with music where folk have spent heavily on replacing vinyl with CD and are now starting to draw breath with MP3 and question a further reinvestment in virtual tracks. People tend to listen to a lot of music, a wider range of music, in lots of locations and in particular on the move and they are aware of the price points and are sensitive to price variation. The new digital tracks are no longer a physical object that you place on a shelf and that say who you are and what you like. You may still display them on a social network, but as more music is digital and even a video track can be streamed for free via YouTube, why do you need to own anything? 

Even though music tracks often are replayed, the vast majority of tracks sit on the virtual shelf forgotten. This may have worked when the album library was both a decorative and taste statement but becomes a wasted investment in a digital buy through environment. The range and diversity of music that is now demanded by many and makes an on-demand model more appealing especially if it is tied to a recommendation engine, reviews and sampling.  

Spotify, Pandora and others have effectively offered music on demand, anywhere, anytime, any device and in doing so have offered both discoverability and convenience at an affordable subscription. This concept changes ownership, rights, valuation and the business model that the relatively new music business has operated within from its conception. iTunes reintroduced the single track, but often at a cost that made little sense to the collector or for people who want to discover new artists and then immerse themselves in their work. 'All you can eat' subscription offers enable the consumer to experiment, take risk and enjoy a wider range of artists than the buy through model. So do the subscription members now listen to more or less music?

Film and TV Home Entertainment is different and here convenience is the real driver as consumers in today’s time hunger environment increasingly want to watch in their time, their chosen place and to break free from the antiquated scheduled slots. Today’s increased bandwidth, mobile technology and network connectivity makes even viewing live video streams a reality. Tying the previously separated subscription services together under one umbrella subscription makes sense as does the shift from the power from the network or device subscription to the content subscription. This can have a disruptive impact on advertising where live audiences are in decline and replay and on-demand audiences are growing. This can even change the funding and pay through models. Home entertainment is just that and producers are having to look at horizontal partnerships as well as cooperative deals to increase the odds of success.

Does the previously well honed staggered release model still work in an environment where the consumer wants it now?

Some would suggest that eBooks have had it easy to date. In the main the industry has merely poured the physical content into the digital container and cried ‘Hey Presto!’ But that could be seen as short-sighted and leaves the door wide open for others to do something different. Subscription models by themselves are different even if they merely offer the same content on a different payment model, but they also have the power to offer more for less. This is especially relevant in a marketplace where readers do not consumer books at the rate they consume other media and often results in a spiky demand profile. Does am easy payment subscription attract only the heavy reader or can it also appeal to those whose reading habit is less predictable? 

Can an eBook subscription offer recreate and feed that book consumption rate that enabled the old book clubs to thrive, or have consumer habits and social trends now changed that? Readers are often very eclectic in their reading habit and need a wide and deep range which is obviously suited to the digital repository but what is the difference between a digital library offer such as Amazon's Lending Library and the public library offers of the likes of Overdrive? Does range matter or is it down to convenience? 

Today's buy through and download model tells us very little about what happens post sale and whether the book was even read or merely languished on the buyer's virtual shelf. Will an elibrary subscription model offer more reading data and if so will it be shared or remain with the retail service provider?

There remains the often thorny issue of what's in it for the author? How will they get rewarded? Can a subscription market offer greater discoverability, reader loyalty and royalty? Will they get paid instantly on each click through, or do they have to wait months in what is a real time world? 

Tomorrow we will look at the emerging subscription players and their segmentation.

Understanding The Subscription eBook Offer

Subscription services are today’s alternative solution to owning what may fast become yesterday’s technology.

Imagine buying eight track cassettes, cassettes, vinyl, betamax, VHS, mini discs etc, today. Yes, some still do but for the majority of us, these are yesterday’s technology both in terms of devices and media. During the last ten years we have achieved many things in the ebook arena and many old formats and devices have come and gone. Do we expect tomorrow to be any different? Do we expect to still be able to read and enjoy that ebook download in say 10 or 20 years? Do we even want to read the book again?

Subscription services coupled with deep and board repositories and on demand technology start to change consumer behaviour and values. Technology devices are becoming media agnostic, or should that be the other way around? Media is no longer confided to what your device can hold or a location but is now dependant on the network, or initially at least.

However as subscription serves and fail to grasp that ebooks are different to journals, film, music and even short form works.

So we have the question of ebook subscription and whether it can follow other media and be successful in the on demand world? The answer is yes and no.

First the yes would appear to be logical. A sort of return to the old book club but not restricted to a limited number of physical stocked titles but open to all titles. A club that cater for the eclectic tastes of readers. A place where readers can discover new authors, experiment with new genre and do so often within an ‘as much as you can read’ contract. A place where authors can show their wares and potentially engage with their readers. In addition it could offer a service where your library is virtual and the shelves never swag under the weight of old book s.

However, the reader has to get value for effectively licenced access as opposed to outright ownership. The challenge is that there is not an average rate of reads per month, per week or per year. To the person who reads a book a week or even more than this the offer may sound like ‘manna from heaven’, but to the person who struggles to read one book a month or is somewhat erratic in their habit, they offer may have little appeal. The point is that we are trying to get more people reading and not just appeal to the minority who are already hooked. This is a serious issue and one of the main reasons for the demise of the old book clubs who found themselves trying to feed a habit which was on the wane as their members became increasingly time poor.

The STM journal market has been built on subscription model but is very different in its creation and consumption model. The authors give their material for free, the articles are often peer reviewed for free and the journals are ‘sold’ back to the institutions on a title not firm commitment basis. In other words there is no guarantee that a said member of issues or articles will be published and there is no refund at the end of the year. The material itself is a ‘must have‘ for the institutions and the publishers offer review and authentication within their value proposition. This is far removed from the trade sector and today’s ebooks that it is somewhat irrelevant.

We must remember that there are two critical people in the value chain, the reader and the author and that any subscription model for any media must also work at both ends of the spectrum.

We have all read about the difference of opinion that has been aired over the royalties being received by artists from Pandora, Spotify and others. This itself does not mean that subscriptions are wrong or not rewarding for artists but says that the contracts and commercial arrangements made were not always in the interests of all parties. We must also remember that the music business entered into such contracts on a different basis than would publishers and the volumes involved are significantly larger.

The LoveFilm and Netflix market is also very different in and although it offers some interesting insights it is very different from the ebook trade and marketplace.

We have the practical or impractical sides of measuring a ‘read’. Irrespective of whether the overall model is based on ‘as much as you can eat’ or not, the royalty payments have to be based on discovery, access reading or some element that constitutes a ‘hit’. It is only right that the books which are read should be paid a royalty. After all we don’t have to pay to enter a bookshop or library and it is the selection that should trigger payment. However, what constitutes a read? If I select a book open it ead the first page and put it down does that count? If I get half way through it and tire and again put it down, does that constitute a read? If I select a book one month but don’t read it for six months or even over six months, when is the royalty due? These and many more interesting options have to be clear to all parties. Also there has to be measures that obviate counting abuse and provide transparent audit by interested parties.

Finally, there is that often thorny issue of whether the existing author’s contracts permit digital subscriptions, or whether it an assumed right? The transparency also needs t flow to the author’s royalty statement and not be buried in ‘net receipts.’

When we engage with a new business model, or channel, we have to assume that it may be a major source of income in the future and therefore ensure that unlike some other sectors the terms are sustainable and equitable  both today and potentially as the service grows.

So subscription services look attractive to many and should be rewarding for all, but they should be entered into with eyes wide open and not half shut. 

Spacey Questions 'Yeterday's' Media Practices

When someone of the status of Kevin Spacey does a keynote speak at the Edinburgh International Television Festival about media and content we have to listen. The speech centred on the lessons he had learned from his successful remake of the ‘House of Cards’ series.

His first point was that in making the series they refused to be drawn into the US TV pilot route forced on the market by the networks. He cites that some 113 pilots were made last year of which only 35 made it to full adoption and that of these only 13 were renewed. This year there are some 146 pilots and 35 take ups. The process is costing the industry some $300 to $400 million a year.

Spacey, who was also executive producer on the show which was nominated for no less than nine Emmy Award, said that "labels" were becoming meaningless and they risked being "left behind". Netflix bought into their production, believed their figures and backed it without a pilot and success followed.

The second point was on the film industry’s continued obsession with the staggered release. They continue to refuse to release via multiple channels simultaneously because cinema companies have insisted on exclusivity periods. There have been incidents where cinema companies have threatened dropping films if they were given simultaneous DVD or online releases.

Spacey claims that in releasing ‘House of Cards’ into multiple channels they dispelled the argument that multiple channel release would not work and that in providing the customer with choice they in fact bucked the lure of the pirate copy and gave the customer what they wanted – choice. He says that film companies should now follow the example and not cower to the cinema company’s pressure.

‘Give people what they want, when they want it, in the form they want it in, at a reasonable price and they’ll more likely pay for it rather than steal it.’ Spacey also says about why the ‘Game of Thrones’ is the most pirated show in the history of TV, is, ‘because people can’t get it fast enough.’

He said: 'If you watch a TV show on your iPad is it no longer a TV show? The device and length are irrelevant ... For kids growing up now there's no difference watching ‘Avatar’ on an iPad or watching YouTube on a TV and watching ‘Game of Thrones’ on their computer. It's all content. It's all story."

If we look at the book trade we hear many calling for staggered releases to be extended to cover digital, whilst others want digital first and some just want simultaneous multi form release. What Spacey argues is both logical and in giving customers choice and also lowers the attraction to share or buy pirate copies. Those who would cite the hardback to paperback, or the international staggered release as best practice, should note that we are now in the 21^st century and that 20^th century and that old models don’t always work in our global and networked world.

To see an abridged video of Spacey’s speech click here

To read the Telegraph article on the speech click here

On-demand Media and Sensory Devices will Change Culture

Our dependency on electronic devices has grown over the last decade. We now appear to be entering yet another cycle of the technology escalation and it resulting cultural change. It will like those before it change how we consume media and how we communicate with others.

The ‘I’ era was one of the Pod, Phone and Pad. It enabled mobility and communication but also created the ‘I’ society who often resembled zombies, switch on, tuned out and transfixed through those white earpieces. What it finally gave us was the platform environment which enabled media to be enjoyed across multiple devices. This platform broke the single device was previously tied to single media. No more Walkmen, MP3 only, eink readers, the smartphone and tablet became the do it all devices for all.

Having created the platform we now appear primed to create sensory devices that themselves will enable a more intuitive interface and also delegate the platform to the cloud. Everything will be available online on-demand and will negate the need to have a local copy or download. This change will be significant as it truly starts to change culture from one of ownership to one of rental and subscription.

So we will have the likes of Google’s Glasses, Apple’s watch and many more sensory aligned devices. Speech recognition will become the norm and retina tracking will negate the need to pitch and squeeze and scroll. Mass robotics are still to fully happen and a device is whatever you wish it to be.

What will come first the sensory device, or the cloud on demand media? Some will suggest the technology is here today and they would be right, but they have yet to be mass adopted and in doing so change the culture.

The media industries now need to gear up for a significant change in business models which itself will create new opportunities for new and well as old media. It’s hard to find a music store on the high street today but when you do look at what they are now selling and recognise their business in now online. Add to that the new services that took up the mantle of Spiral Frog and are delivering on-demand media by subscription and we have a culture change that isn’t going back in the box.

In ten years sensory devices may have gone even further than we think possible today and the speed of bandwidth and universal connectivity will make the cloud reality. 

Subscription Is Coming

Subscription business often make good business sense to both the service provider and the consumer. For the service provider it enables them to build a sustainable and predictable revenue stream where the peaks and troughs of fads and the unpredictability of demand is cushioned by the width and depth of offer. They still have to manage down the exposure to churn, but have the opportunity to build customer loyalty and relationship. For the consumer it offers the obvious one stop shop and protection from change in what today is often dynamically changing markets.

Media, technology, software, communications are some of the sectors now either moving towards or heavily entrenched in subscription business models.

Today we have the new battles between BskyB and BT, where the latter threw a new gauntlet down with their ‘free’ new sport channel. BskyB have now responded with unlimited broadband for anyone signing up to its Sky Sports channels. This means that a new Sky customer can now pick up broadband for as little as £5 a month on top of their line rental. It is clear that this cross selling and subsidy offer is just starting and will not just effect these two but everyone else who offers any competing service.

We now have some clear adversaries in the various markets. In music we have Spotify locked with Pandora with Apple and Google trying to muscle in. In films we have Lovefilm vying with Netflix with the battle now spilling over into production and competing with Sky. The world of software which was built on selling perpetual licences is now rapidly repositioning itself to annual licences and is being driven by the likes of Microsoft’s Office 365 and Adobe’s Creative suite. 

But what about books, newsprint and magazines?

Learned and Academic journals have long successfully worked within an institutional subscription model, which is now under a different threat from the open access movement. Newsprint and magazines have had mixed success with subscriptions. Where the material can be sourced from an alternative free feed it has struggled, but where the material is highly valued, authoritative and is a 'must have' subscriptions have had success. 

Some have tried book subscriptions and the many failed book clubs are a warning to many, whilst others such as Oyster believe that subscriptions will work for ebooks. The challenge is that apart from heavy book readers, consumers don’t read enough books to justify subscriptions and those heavy book buyers aren’t the problem. We believe that our new Read Petite venture is different and that short form work is perfectly suited to a subscription model.

It’s interesting that some of the largest technology players are looking hard at subscription businesses. Intel is reported to be looking to create a US cable service that would sell a bundle of television channels to subscribers over the Internet. However the existing players are not for rolling over led by Time Warner Cable and other cable and satellite distributors. The distributors are pressuring the cable channels, with whom they have lucrative long-term contracts, not to sign new contracts, which in turn is threatening to bring in the DOJ antitrust investigators. It is certain that the likes of Apple, Microsoft and Sony are watching from the wings.

What is certain is that cross media consolidation will happen. You will be able to subscribe to a service and receive; broadband, tv, film, music, games, software, mobile and digital reading. Devices won’t matter as everything has to be device agnostic. It is not a case of if, but when and who will dominate the market with offers you can’t refuse. To prepare for this opportunity we have to understand how ‘stuff’ gets licenced and how creators get rewarded. 

We should not simply say ‘no’: we have to instead engage and make it work.

Digital Evolution: Part 2 Images

Yesterday we explored the evolution and impact of digital music and today we look at Images. This can be ‘still images’ such as photography, or ‘moving images’ such as film, animation and television.

We now all take television, photography and film for granted, but it was less than 200 years ago that the only way to capture images was literally with a pen, ink and paint. It wasn’t until the 19^th century that photography, followed later by film was invented. Many of the technologies first adopted were time consuming, proprietary and gave low quality results but the seeds of mass adoption and audience were sown.

Although Kodak proudly boasted of their camera in 1889, ‘you press the button we do the rest,’ the rest was what made companies such as Kodak very rich.  The first movie camera didn’t appear until 1880 but it wasn’t until ‘The Jazz Singer’ in 1927 that sound on film became reality. Ironically, at the same time in the ‘20s, Logie Baird was creating the very first television signals.

The digital evolution which began 1957 with Kirch’s first digital picture (176 x 176 pixels) and later with Kodak’s first megapixel sensor in 1969. The next decades have somewhat mirrored the experimentation phases of the 19^th century and at the same time have had the same profound impact on how we now, create, develop, share, distribute and consume images.

Tim Berners-Lee published the first photo on the web in 1992. Today we all post our pictures on the likes of Facebook and store our digital libraries on the likes of Instagram. The once mighty Kodak has fallen and technology has consolidated and shrunk into the smartphone we all carry. This means that we are all now capable of capturing that moment and instantly posting it, not just to friends, but to everyone connected to the net.

We witnessed the bloody video wars between VHS and Betamax which were won by the availability of the first consumer camera and some would suggest the take up of the technology by the porn industry.

Television is no longer restricted to the schedule. The likes of Tivo and later BBC iPlayer have redefined TV on demand. The increased capacity of today’s network means we don’t have to buy the DVD, or the lost Blue ray, we can click and watch almost anything on demand when we want, where we want and on what we want. This is now resulting in the merging of services. The likes of Netflix, iPlayer, Sky and others are commissioning their own unique material to supplement their existing content. Film channels that were once provided on the back of a connection service, such as Sky, now have to compete with services such as Netflix who don’t have the same infrastructure. TV schedules and ratings have become less important and the money is shifting to the value of the rights, content and brands.

We have seen the production experts and expert tools continually fall. To alter an image you once needed an expert, then you needed very expensive and complex software tools, now the likes of Adobe Photoshop, digital publishing and movie publishing software is freely available to all. Even the relatively new world of CGI, which commanded an expensive software price, has now plummeted down in price and is available for all at £5K and falling. Technology, or its cost is no longer a barrier to creative entry.

YouTube has not only started to redefine music consumption it has helped redefine moving image quality. What once would have been frowned upon as sub standard filming is now more acceptable. Even the movie industry has made ‘hand held’ films and recognised that everything doesn't have to be perfect. CCTV surrounds us and what appears to be our every move. The smartphone has also started to redefine news coverage, where news can be instantly capture and contrary to the words of Gil Scott Heron, the news will be televised.

However, finding a digital needle in a digital haystack still requires effort. Still images are all too often badly indexed and their rights unclear. Semantic tagging is still a holy grail with one person seeing ‘Hay’ and another a ‘straw hat’ and another seeing neither and just a painting by Van Gogh.

So what is the future of imagery? Sharing and distributing and being able to consume content has never been simpler and available to all. However, a good photograph still requires a photographer, a good film a director, script and actors.

It’s not so much about technology, it’s about human creativity.

Is The Online, OnDemand, Subscription Model The Way Forward For All?

Netflix launch in the UK at the beginning of 2012 and we thought that they would have a tough time establishing themselves, their brand and competing head to head with Amazon’s Love Film rival. We were wrong! Netflix in its first seven months has acquired 1 million subscribers in the UK. They have created a new business territory that is now worth £72 million and growing in just 7 months! Netflix took 10 months to achieve 1 million subscribers in Latin America and the Caribbean, and 10 months again in Canada. The catchment and infrastructure is different in the UK and Ireland with some 67 million consumers with good access to high-speed Internet services, whereas Canada is smaller population 34 million and Latin America and the Caribbean have 98 million but inferior infrastructure.

Some may say so what and point to LoveFilm’s 2 million customer base is wider and is across not just the UK, but also Germany, Sweden, Denmark and Norway and Sky. However, Netflix plan to launch in Norway, Denmark, Sweden and Finland by the end of the year. But the fact is that Netflix can to the UK and gave a simple message video on demand and as much as you can view for one price. The recent Harris Interactive ‘Screenlife’ report (July 2012) asked smartphone and tablet users to rate the appeal of an online music service on any connected device, with access to  practically any track available today even if you don’t own them, where you pay a monthly subscription of around £5 – 10? They also asked the same about watching as many films or TV programmes from a large library using any connected device, where you pay a monthly subscription of around £5 – 10? The response was significant

Appeal	Extremely	Very	Somewhat	Not Very	Not at all	Not sure
Smartphone
Music	14%	11%	24%	24%	25%	2%
Video	17%	16%	25%	17%	21%	2%
Tablet
Music	28%	17%	18%	16%	21%	1%
Video	32%	19%	19%	12%	17%	1%

Netflix claim that the top UK and Ireland genres are comedy and drama and users’ favourite time to stream is on a Sunday night, according to the service.

So will the same shift to an on demand subscription based service model impact other media markets? It is clear that the the  way we all consume and pay for media is changing radically and moving from, pay to own, to subscribe for on demand. This is no longer about music, film, games, TV,information and books , but about all digital media and how we find it, access it and pay for it.

Today’s book market is tearing itself apart with discounting, ebook pricing tactical games and a lowering of consumer price perception. Will now lead to a Spotify or Netflix for books or a continuation of the devaluation of the content? 

Related articles:

http://bookseller-association.blogspot.co.uk/2012/01/media-on-demand-takes-another-step.html

http://bookseller-association.blogspot.co.uk/2011/01/amazon-take-all-of-lovefilm.html

Media on Demand Takes Another Step Forward

The way we all consume and pay for media is changing radically and moving from, pay to own, to subscribe for on demand. This is no longer about music, film, games, TV,information and books , but about all digital media and how we find it, access it and pay for it.

The film on demand wars just got a lot more interesting in the UK with the news that Movie and TV streaming service Netflix has launched in the UK and Ireland. It is claimed that Netflix has been the single biggest driver of internet traffic in the US and has over 20 million online subscribers in 47 countries.

Online rival and Amazon owned Lovefilm, recently surpassed two million subscribers and both it and Netflix now line up against Sky Movies,Sky Atlantic, Virgin Media, YouTube and retailers such as Tesco’s Blinkbix for the online market.

Netflix has only launched its online service in the UK and in doing so has pledged to break BSkyB's stranglehold on the movie market. The service will allow users to stream film and TV content on devices including tablets, smartphones, games consoles and internet TVs and all priced at just £5.99 a month. Not to be undone Amazon's LoveFilm, has announced a new "streaming-only" tariff at £4.99 a month. Netflix hopes that its personalisation technology and an integration with Facebook, which allows people to share what they are watching with friends on the social network, will also provide it with competitive edge.

Netflix has also announced a number of new TV and film deals with partners that include Channel 4, Disney, ITV, Sony, 20th Century Fox and All3Media. These deals are mainly for the second rights window as opposed to BSkyB’s which has prime rights deals with the six major Hollywood studios which enable it to air films in the first pay window. When Netflix launched in Canada the company had no "pay one" deals.

Netflix has also announce deals with the likes of the BBC, Miramax, Lionsgate, MGM which will give it access to titles such as Pulp Fiction, Kick-Ass, Top Gear and Doctor Who. Lovefilm has agreements with partners including ITV, BBC, Warner Bros, Entertainment One, Sony and Studio Canal for titles that include the Twilight Saga, Tinker, Tailor, Soldier, Spy and The Social Network.

So the UK now has three determined online streaming service providers who are not only going to aggressively compete on price but also on content. We see the growth and demand for Spotifty's music on demand, Wii's expansion to media console and recognise that as media continues to converge, platforms become important and usage migrates to on-demand we ask why many many still see books as different?

Amazon Prime Head to Head With Netflix

Amazon has announced the launch of new video streaming service that gives Amazon Prime members unlimited, commercial-free instant streaming of more than 5,000 movies and TV shows. Previously the Amazon Prime service was about offering free shipping irrespective of the purchase price for just US$79 per year. Now for no extra charge Prime members get the new service effectively for free and Amazon is even offering a one-month free trial of Prime to non members. This is creative cross selling and creation of a premium media and shipping service.

The movie and TV show content can be instantly accessed on Pcs and some 200 Internet connected TVs, Blu-ray players and set-top boxes.

Netflix now is clearly in Amazon’s sights and although its streaming catalogue is considerably larger Amazon's overall catalogue for rentals and purchase exceeds 90,000.

The combination offer of Prime and streaming services could not only kick start the new service but will ultimately boost sales of physical and digital products. It is a clever strategy which may be restricted today to the US but points to what they can do with their recent LoveFilm.com UK acquisition.

Amazon is now laying a cross media and cross border architecture which could be very attractive and even negate them the worry of the toll booths that Apple has misguidedly erected. It is feasible that Amazon can now extend streaming to music, ebooks whatever and I doing so create a premium service for all.

Amazon Take All Of LoveFilm

If you already own 42% why not close the door and buy up the remaining 58%? That’s what Amazon effectively have done today in acquiring the remaining 58% in European film rental operator Lovefilm in a deal that is suggested to be around £200m. Amazon originally bought a 42% stake in Lovefilm in 2008.

Lovefilm was formed in 2004 as a film club sending DVDs to customers in the post and has now expanded into streaming digital movies to TVs and PCs and renting video games. It has some 1.6 million members in the UK, Germany, Sweden, Norway and Denmark.

Amazon clearly are eyeing up the wider media space and outside Europe, see US operator NetFlix, with a market capital of around £9.7bn and 16 million subscribers as both a potential threat and opportunity.

Despite having a very strong, stable and growing core business in DVD by post, Lovefilm has stepped up its movie streaming business, declaring that online was now its "primary" business. Equally, Netflix has announced its intention to expand, with Europe and the UK being a natural next step after Netflix Canada. Netflix's movie library is significantly larger than Lovefilm’s but Lovefilm should now be in a stronger position to defend itself against Netfix’s declared international expansion and with Amazon have a global brand and service leader.

This is obviously a good day for Lovefilm but we would suggest it is also a good day for Amazon who would want to have a global offer across all media.

Blockbuster and Chapter 11

Blockbuster, the company that once owned the video rental business, has announced $900 million debt and that it has filed for Chapter 11 bankruptcy protection. In a last chance and throw of the dice Blockbuster are now fighting for their lives in a world that has now clearly moved to movies on demand and instant access to movies on PCs and other devices.If the courts approve Blockbuster’s Bankruptcy plan it will clear its debts and only have a $125 million loan to its new ownership group and importantly access to additional $50 million credit line to finance operations.

Currently, all 3,000 Blockbuster stores in the U.S. will remain open and the company hope that this move will reposition its brand and build on its library of over 125,000 titles, and our position as the only operator that provides access across multiple delivery channels stores, kiosks, by-mail and digital.

How do such a giant as Blockbuster get into this mess? The answer is that they missed the likes of Netflix, didn’t position themselves for digital and 3,000 stores don’t count in an online world or even in a world where video disks get serviced through the mail. By the end of the year it is claimed that you will be able to stream Netflix movies on more than 100 different devices, whereas Blockbuster is on less than six devices.

It is a salient lesson to all High Street players in the media world that being the biggest and best doesn’t guarantee tomorrow only that you have further to fall.