Amazon announcement: new Kindles. Hollywood: new worries.
Amazon announcement of seven new Kindles is a boon for consumers. But Hollywood worries the Amazon announcement will speed the move from buying to renting movies.
Amazon.com Inc.’s seven new versions of its Kindle offer consumers more choices in the rapidly expanding tablet market.Skip to next paragraph
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But for Hollywood, the news is decidedly mixed.
At an invitation-only Santa Monica, Calif., event Thursday, the online retailer introduced its new Kindle Paperwhite e-reader, which Chief Executive Jeff Bezos described as “thinner than a magazine and lighter than a paperback,” and a Kindle Fire HD tablet, which boasts features such as X-ray for Movies, an application allowing the viewer to look up information about any film with a tap of the finger.
Amazon’s prodigious device lineup — with tablets and e-readers ranging from $69 to $599 — suggests a direct challenge to market leader Apple Inc. But these gadgets advance a different goal: to broaden access toAmazon’s growing library of movies and television shows.
“We want to make money when people use our devices, not when they buy our devices,” Bezos told the crowd of about 250 that had gathered for the Amazon announcement.
The rabbit-like proliferation of these devices has spurred media viewing, as consumers increasingly use go-anywhere screens in place of a second TV in the home. Although on the surface the explosion of new screens would suggest an opportunity for film and television studios, the reality is more complex.
Although millions of consumers have paid $830 for a shiny new Apple iPad or $199 for Google Inc.’s rival Nexus 7 tablet or the Barnes & Noble Inc.’s Nook, they’re still looking for the cheapest way to watch movies and TV shows on these devices, media analysts say. Consumers have been moving away from purchases in favor of inexpensive alternatives such as movie rentals or online subscription streaming services such as Netflix, which return less money to the studios.
“As these new portable technologies exploded in the last two years, this has just accelerated the trend,” said Tom Adams, principal media analyst for researcher IHS Screen Digest, noting that purchasing has been declining since 2007.
This shift away from ownership is reflected in the most recent report of consumer spending on home entertainment. Purchases of DVDs, Blu-ray discs and digital titles in the first six months declined 2 percent from the first half of 2011. At the same time, spending on subscription streaming has risen exponentially, to $1.1 billion in the first half from $208.2 million a year earlier, according to a report from the Digital Entertainment Group.
Tablets are helping drive changes in how media is viewed in the home.
Some 126.6 million tablets are expected to be shipped worldwide this year, a leap of 56 percent from 2011, according to researcher IHS iSuppli. Apple continues to dominate the tablet market, which it ignited with the 2010 introduction of the iPad. The Cupertino, Calif., technology giant has sold some 84 million tablets and is rumored to be developing an iPad Mini to compete with rival gadgets with lower price tags. Other entrants — from Amazon’s Kindle Fire to the Galaxy Tab from Samsung to other tablets powered by Google’s Android operating system — are expanding the market.
“We’re going to see rapidly declining prices and continuing adoption of tablets by Americans,” said Bill Niemeyer, a senior analyst at the Diffusion Group, a consulting and research firm. “And they’re not just buying one. We’re talking about multiple tablets in a household. Instead of buying a small TV for the bedroom, they’re using a tablet. The big-screen TV in the living room is not going away, but the second and third TVs — those are going to increasingly be replaced by tablets.”
That’s both an opportunity and a challenge for the television networks, Niemeyer said, depending on whether they’re able to take advantage of the surging tablet market.