Amazon-Netflix rumors fly

Rumor has it, Amazon is buying Netflix.

With the DVD biz in a freefall, both parties would benefit from offering a massive library of streams and a growing VOD biz.

Netflix is growing its member base (over 10 million last quarter) at a time when other consumer services are shedding subs. And what media platform company would turn down a fee-based business model in this advertising downturn?

2009 Digital Media Trends

With ad sales drying up, it is safe to say that digital media companies have to look for other revenue streams. Subscriptions are clearly an alternative. Fee-based business models provide a much more stable revenue source. Surely it is working for Netflix. It is one of the few companies that have thrived in this economic environment. As packaged media declines, Netflix will continue to roll out online streaming services and charge a premium.

There will be consolidation in the online video space. How many players can compete with YouTube and Hulu? Look for secondary players to fall by the wayside.

As businesses cut costs during these lean times, profit margins will improve. When the economy improves, the thriving companies will have more operating leverage than ever before.