As anticipated, Amazon launched an online DVD rental service in Britain December 9, with the kings of e-tail saying they would charge up to 30 percent less than their competitors.
They didn’t say whether they planned a similar online service for the U.S.
The news opened eyes in Britain toward a possible and irrevocable shift in the British retail picture, according to several published reports. “This could signal the end of the High Street rental store as we know it,” said Retail Week’s Jose Riera. “This is a market that is expanding hugely, and I think Amazon's entry is very important – it could well spark a price war.”
"I was surprised that they started in the U.K. and not the U.S., but it was a shrewd move if you consider the competition in the U.S.," Pacific Crest Securities analyst Steve Weinstein told the Los Angeles Times. "The company has some inherent advantages over the competition in the U.K."
Amazon’s online DVD rentals in Britain will begin at $15.50 a month with customers also getting ten percent off DVD purchases and being allowed to keep two DVDs at a time while renting four per month. At a higher $19.30 per month, they can keep up to three at a time and rent six per month.
Amazon may not yet be moving to a U.S. online DVD rental outlet but that doesn’t mean they haven’t affected the American picture. Netflix, which pioneered the online DVD rental market, dropped its subscription prices from $21.99 to $17.99 in October. Blockbuster followed Netflix into the online rental market not long after that.
“Amazon is determined to be the best place to rent DVDs online or off,” Amazon chief executive Jeff Bezos said in a statement.
Blockbuster isn’t exactly shivering. “[I]f customers prove to want a low-cost limited proposition,” the company said in its own statement, responding to the Amazon move in Britain, “we’ll offer one.”
"Most competitors are not very competitive, they just try to do what you do and try to do it a little bit cheaper," said Netflix chief executive Reed Hastings to the Times. "They have shown yet again they are a very creative competitor."
