The Best Time to Short AMZN is NOW –5/8
The Best Time to Short AMZN is NOW –5/8
DVD rental
AMZN’s foray into online dvd rentals is a much hyped, but largely irrelevant part of AMZN’s future growth prospects. AMZN is a late entrant into the space, and it is unclear what additional value they bring compared with established competitors (NFLX, BBI, WMT, etc.), outside of arguably some benefit from their large customer list and distribution infrastructure.
Despite speculation that they would launch in the US, they have only launched in the UK for the time being. I find it ironic that this business is attractive and an asset to a company like amazon, while the business on a stand-alone basis (with BBI and NFLX) is considered to be intensely competitive, unsustainable due to high churn, and at risk altogether from digital downloads. Forgetting all the concerns with the business model and the fact that AMZN is way behind the competition, I will assume that AMZN will become a leader in the space and that this opportunity is worth $1.2B currently, which is NFLX current EV.
Digital Distribution
Amazon is trying to eventually position itself to be a leader in digital content distribution. AMZN is late to the party, and has some formidable competition from the likes of Google, Yahoo, Apple, and a handful of small niche players (MovieLink, CinemaNow, etc.). To date, AMZN has focused on hyping its new digital music service. Lets forget for a moment that nearly all the big players have launched a similar service, or that apple is the undisputed leader in the space.
After over a year of discussing ways of differentiating itself, including scrapped plans of releasing its own player, AMZN appears to have settled on a rather unspectacular solution–they will release DRM free music from EMI (for which APPL also has a contract), as well as 12,000 independent music companies. In other words, outside the 12k independent labels (who all likely have deal with APPL as well), there really isn’t much differentiation, at least for the time being. Also, unlike other players, AMZN risks cannibalizing its own music sales.
To be Continued….
(Meanwhile, here is a link to see my past articles of some good picks:)
http://www.mystockwinners.com/comments-on-iag/
Leave a Reply