There are rumors that Amazon is interested in buying Netflix. I like the idea, though it’s just one step toward the sort of subscription media consolidation that I outlined a while ago.

What Netflix offers Amazon is a highly-regarded service and a substantial audience. This is also known as a brand.

What Amazon offers Netflix is scale and a future. While Netflix is king of the heap in the DVD rental business right now, their future as a streaming company is anything but assured. Such a transition will require massive investment in both infrastructure and brand — and there are a lot of people trying to claim the same market.

I see a three-horse race in the future of subscription media. There will be Apple (iPhonePod/iTunes), Microsoft (Zune/XBox) and a third company that is the consolidation of Amazon, Netflix, Pandora, Rhapsody and/or Tivo. The consolidated company will likely be called Amazon.

Possible spoilers/wildcards:

  • Microsoft scoops up Rhapsody
  • Legacy media jumps into the subscription business (via Hulu)