Amazon To Use Streaming Media To Hook Customers

Amazon.com (Nasdaq: AMZN) said Tuesday it had struck a partnership designed to beef up its ability to stream audio, video and game clips as a way of improving the shopping experience for its customers.

“Digital media streaming has enormous long-term potential for online retail,” said Jeff Blackburn, general manager of Amazon’s Worldwide Digital Group.

Amazon said it inked a deal with Speedera Networks, a privately held firm based in Santa Clara, California, to improve the e-tailer’s ability to stream media to customers, regardless of the speed of their Internet connections.

“Amazon is increasingly using promotional music, video, and game streams to improve our customers’ product discovery and purchase decision process,” Blackburn said.

The new deal, Blackburn added, will make streaming media “an even larger part of the shopping experience on our Web sites worldwide.”

Smoother Flow

Speedera said its use of a worldwide server network, one that delivers content from a location closest to the customer, will reduce wait times and make clips less choppy — common frustrations for Web users, particularly those with slower connections to the Internet.

Amazon is hoping that improved streaming media will help drive sales and is planning to use it primarily to lure and hook customers as they search for and consider buying videos, compact discs, digitally downloadable music and video games.

“Amazon recognizes that the customer’s Web experience is a key ingredient in maintaining a leadership position,” said Speedera vice president of marketing Gordon Smith, adding that streaming media will also help convert browsers into buyers.

Glimpse of Future

Customers at Amazon will taste what is expected to become an exploding market for streaming media on content and commerce sites, as well as in its use for online advertising.

Last week, the Yankee Group predicted that marketing based on streaming media will grow from US$44 million last year to $3.1 billion by 2005. Yankee said the growth will be fueled by wider adoption of broadband technology.

Profit Push

The move to boost the customer experience comes as Amazon makes what appears to be a final push for year-end operating profits.

On Monday, Amazon announced plans to open a software licensing center designed to target small business users.

That launch mirrors earlier efforts to grab a larger share of the market for downloadable software and music, which analysts say offers the larger profit margins that Amazon will need in order to reach and sustain long-term profitability.

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