Amazon is cutting off sales of streaming products Apple TV and Google Chromecast. Amazon’s website will, of course, continue selling its own streaming device, Fire TV. Not coincidentally, it works rather nicely with Amazon’s streaming service Prime Video. Amazon is giving up a cut of hardware sales in an attempt to rule streaming media.
“The question is: Is the revenue from content distribution more than the device [revenue]? And the answer definitely is yes,” said University of North Carolina business professor Arvind Malhotra.
The battle for streaming customers is a tough one with no certain outcome, so Amazon’s using its e-commerce muscle to fight back against its formidable competitors.
“This is a clear winner-take-all market,” said Jerry Kim, who teaches strategy at Columbia Business School. “Once a lot of people are on a particular platform, you tend to get locked in. It’s very hard for people to switch out to another system. So I think they’re trying to race ahead and get more market share in this war to lock people out from other content providers.”
As news of Amazon’s move spread, some social media commenters questioned whether Amazon could face antitrust action. NYU law professor Scott Hemphill doesn’t see a strong case. And he was previously antitrust bureau chief for New York’s attorney general, so he’s always on the lookout for a good court battle. Actually, when Amazon and other powerful companies play hardball with each other, it can be pretty cool.
“These attacks on each other’s strongholds, we should applaud that,” Hemphill said. “The benefits for innovation and ultimately for consumers are potentially quite large.”
Amazon is a retail powerhouse. Apple has devices and iTunes. Google dominates search. If they fight it out hard enough, they might end up making something consumers will like.
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