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News & Updates - Tuesday, October 26, 2004

The Slow Moving Amazon

The financial cable shows and newswires are fired up over rumors that Amazon will go head to head with Netflix. Pundits have plenty of opinions about what this means, but the market hates it - Netflix' stock has fallen over 40% on the rumor, though it has recovered a bit.

Should Amazon enter the market it will surely take away future Netflix' customers. But far from being a cautionary tale this is great news for entrepreneurs and VCs. Netflix was founded in 1999, it now has 2.2M subscribers, and a solid cost of customer acquisition ratio - $36 to get a $20 p/month subscriber. Its a great business opp - one that Amazon by rights could own, and yet the Seattle giant has sat on its hands for five years. Five years has been plenty of time for Netflix to mature operationally, go public and become known as the standard. Every entrepreuner should be so lucky to have such a cake walk.

Read - Company Profile: How Netflix Rents 3 Million DVDS a week to 2.2 Million Paid Subscribers (Marketing Sherpa)