Amazon.com made its anticipated entry into renting DVDs over the Internet yesterday, launching a service in the United Kingdom that the world's largest Internet retailer says will...
Amazon.com made its anticipated entry into renting DVDs over the Internet yesterday, launching a service in the United Kingdom that the world’s largest Internet retailer says will charge up to 30 percent less than its competitors.
“Amazon is determined to be the best place to rent DVDs,” Amazon Chief Executive Jeff Bezos said in a statement.
The company said it didn’t have plans for a similar U.S. service to announce at this time.
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In October, U.S. DVD rental pioneer Netflix said it was slashing monthly subscription prices from $22 a month to $18 and temporarily halting its expansion plans into the United Kingdom to confront the expected challenge from Seattle-based Amazon. The Los Gatos, Calif., company did not immediately return calls seeking comment yesterday.
Amazon said its U.K. service will start at about $15.50 a month. Customers also will get 10 percent off DVD purchases. The lowest-price service will let customers keep two DVDs at a time, and rent a total of four DVDs a month. For about $19.30 a month, customers can keep up to three DVDs at a time, and rent six per month.
Amazon’s monthly price is higher than Netflix’s $17.99 subscription, which has no limit on DVDs shipped per month, said Daniel Ernst of independent research firm Hudson Square Research.
What that means, according to Ernst’s analysis of the two companies’ rates, is that Amazon is “not likely to enter the U.S. market with a price war in mind.”
Goldman Sachs Investment Research analyst Anthony Noto called Amazon’s move an “incremental positive” in a note yesterday.
“It provides a potential new growth opportunity, leverages Amazon’s existing infrastructure, installed customer base, supplier relationships, and technology expertise, and generates high-frequency traffic without much incremental cost,” Noto said.
Amazon stock climbed $1.10, or 2.8 percent, to close at $39.82 yesterday.
Researcher Ernst’s analysis was reported by CBS MarketWatch; analyst Noto’s remarks were reported by Reuters.