Amazon's Latest Delivery: Video on Demand

Amazon.com (Nasdaq: AMZN  ) has already dabbled in video downloads with its Unbox TV episode and movie store. Now the company kicks its video efforts into high gear with a slick streaming service.

The skeptics out there might ask, "What's the big deal? Couldn't we just download stuff from Unbox and be happy?" Well, the mythical American consumer (cursor curiosus, a nervous member of the family Sciuridae) likes instant gratification, which explains why Google's (Nasdaq: GOOG  ) YouTube draws such a crowd: Click a thumbnail, and the video starts playing immediately. No need to wait for a long, boring download.

So Amazon's Video On Demand now delivers immediate satisfaction through multiple channels, replacing Unbox's download-based model. A Microsoft (Nasdaq: MSFT  ) Windows PC or Apple (Nasdaq: AAPL  ) Mac will play these videos equally well, as will your TiVo (Nasdaq: TIVO  ) , your Xbox 360, or any gadget you own with Adobe (Nasdaq: ADBE  ) Flash support. Yes, that includes that spiffy new Google browser.

Amazon's content library looks fresh, with 40,000 titles under its belt. Most of that consists of single episodes of popular TV shows, at $1.99 a pop (a dime less per episode for a full-season "TV pass"). But you can also rent some 6,300 full-length movies, or buy permanent viewing rights for more than 8,000 movies. Rentals usually cost $3.99 per 24 hours, which is roughly comparable to renting a new release on demand through my Verizon (NYSE: VZ  ) FiOS service, though some older or smaller-budget flicks can be had for a week for $2.99. The full-on purchases tend to range from about $4.99 (Terminator 2) to $14.99 (Superbad).

The convenience factor is hard to match, as Amazon tacks a YouTube-esque user experience onto much longer material. Some of it is free (and devoid of commercial breaks), but most of these streams are clearly monetized. Check back in late October when Amazon reports earnings again, and we'll see how this experiment works out. Amazon holds one advantage that free, ad-supported Hulu -- its main rival in this niche of the video market, featuring many of the same TV series -- can't match: a well-known brand name. I have a feeling that Mr. Bezos is onto something good here.

Further Foolishness:

Microsoft is a Motley Fool Inside Value recommendation. Google is a Motley Fool Rule Breakers selection. Amazon.com and Apple are Motley Fool Stock Advisor recommendations. Try any of our Foolish newsletters services free for 30 days.

Fool contributor Anders Bylund owns a few Google shares but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like. Foolish disclosure runs on equal parts caffeine and Ritalin.


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