Toys"R"Us Moves into Online Video â€” and Will Be Slaughtered
Oct 4th 2012 6:18AM
Some corporate decisions are so stupid whenÂ they are madeÂ that it staggers the mind. Toys"R"Us will get into the video streaming business, likely on the assumption that it can use its brand to get children to subscribeÂ to toysrusmovies.com. But children will notÂ beÂ the onesÂ spendingÂ the money. The parents who must make the decisionÂ toÂ get theÂ service alreadyÂ have access toÂ plenty of video for youngstersÂ on Netflix Inc. (NASDAQ: NFLX), Apple TV and cable system movie products. The battle among these companies already has thinned margins, as investors in Netflix can attest. A late entry into this business cannot hope to make money.
The first offering at the Netflix site is labeledÂ "Just for Kids." The section includes almost every child's video imaginable, from Nickelodeon to "singalongs" and nature films.
Amazon's Prime Instant VideosÂ is part of the e-commerce company's premium service, which includes free shipping of items bought from the firm. And, Amazon Prime costs only $79 a year, which translates into $6.58 a month - for the video service and all of the other benefits. Amazon Prime Instant Videos has plenty ofÂ movies and TV showsÂ for children.
Then there is Apple TV. A subscription is $99 a year. As anyone would expect from Apple Inc. (NASDAQ: AAPL), the service is easy to use and its video library is huge.
Toys"R"UsÂ believes that the power of these other brands, which are among the most well-regarded and well-known in the world, can somehow be overcome by a service that is no different from the othersÂ and relies on theÂ Toys"R"Us brand. How could management delude itself into thinking thatÂ Toys"R"Us has any advantage against such a powerful slate of players?
Douglas A. McIntyre
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