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August 21, 2006
Pricing Cuts Hit Nascent Online Video Market
In a testament to just how quickly the online video market is evolving, Guba is already starting to cut pricing. I am not sure I have ever seen a cycle of evolution happen this quickly, but it certainly underscores how crowded the market already is, even as other new rivals, including Amazon, have yet to make their entry.
Think about this. Guba only began selling major studio videos online in late June. Now, barely two months later, it's slashing prices. Guba is selling downloadable movies for $9.99 on the same day as the DVD release, catalog movie titles for $4.99 and TV show episodes for 49 cents. Rented movies cost 99 cents.
Of course, this is a limited time offer, so it can also be seen as marketing. But with competition building, the novelty alone of being able to buy videos isn't enough to help establish a name in this space.
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From a marketer's point of view, I see slashing prices as usually a desperate effort to grow market share. It can and often does indicate a left turn down the end of business road. There are better, more reliable and much more profitable ways to grow a business.
Posted by: Lewis Green at August 22, 2006 11:12 AM
I actually saw this as more than a grab for marketshare. First off, there's simple name recognition in making such a bold move so early. This has gotten some lipservice in the blogosphere at least.
Second off, the pricing models are still flexible, so playing with numbers early not only potentially grabs a little market share, it gives Guba a sense of where the numbers should perhaps be *before* the competition (who will now probably wait to see where Guba's numbers settle and then use that as there "reseach" - no, it shouldn't, but yes, it happens).
I'll be interested in seeing how things settle out in this business. Unlike music - which Apple ran roughshod over - this one might be more volatile.
Posted by: csven at August 22, 2006 07:46 PM