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Amazon Expands Its DVD Business

The online retailer has purchased CustomFlix, which creates and ships discs -- even obscure titles -- on demand.

July 09, 2005|Chris Gaither | Times Staff Writer

SAN FRANCISCO — From the time Amazon.com Inc. sold its first book 10 years ago this month, it strove to offer everything in print. Now, everything in print is just not enough.

The world's biggest online retailer said Friday that it had acquired CustomFlix Labs Inc., a small company that creates DVDs on demand. Amazon would not disclose terms of the deal, which came three months after the company bought BookSurge, which does the same thing with books.

The goal is to expand Amazon's already massive catalog and carry titles that may be requested so infrequently that they don't deserve space in the company's warehouses. With the two purchases, Amazon can wait until someone orders an obscure title and then burn one copy of the DVD or print one book.

The acquisition of CustomFlix could give independent filmmakers a broader venue for selling their work. Amazon already sells CustomFlix titles, but a spokeswoman for the online retailer said that they would be "better integrated" into the company's catalog and eligible for promotions that CustomFlix titles currently aren't.

CustomFlix "is consistent with Amazon's DNA," said Harrison Miller, a Silicon Valley venture capitalist and former top Amazon executive. "It's about people self-publishing and expressing themselves and then finding an audience for their work on Amazon."

Amazon launched on July 16, 1995, in Seattle. The first book it sold was "Fluid Concepts & Creative Analogies," by computer science professor Douglas Hofstadter. Since then, the company has become much more than an online bookstore, expanding into jewelry, electronics, clothing and dozens of other retail categories.

The website also has become a commerce platform. Brand-name stores and independent sellers, including filmmakers hawking their movies, can hang a shingle and sell their wares to Amazon shoppers in exchange for handing over a cut of sales.

Amazon appears headed in that direction for the film industry. It not only sells movies but also helps get them made. It has sponsored film festivals, produced short Web-only films starring such actors as Minnie Driver and offered a subscription service on its Internet Movie Database for connecting agents, producers and talent.

With CustomFlix, Amazon will be able to create the actual DVDs for some programming.

Santa Cruz-based CustomFlix, founded in 2002, receives a copy of a film or TV show, converts it into a digital file, compresses it and creates menus for chapters and special features. When someone orders the DVD, the company burns a copy, assembles packaging and ships it.

Such a strategy doesn't make sense for big sellers such as "Spider-Man 2." But for titles that can't get shelf space in stores, CustomFlix and companies like it can help get the films in front of viewers. Fox Sports sells DVDs of old college basketball and football games. The Style Network cable channel is selling the first season of "The Brini Maxwell Show." AtomFilms, a website for short films, lets consumers choose their favorites and compile them on DVD.

DVDs listed for sale on CustomFlix's website include "Break Dancing Made Simple Volume 1" and "2004 Oklahoma City Gay Pride Parade."

With the acquisitions of CustomFlix and BookSurge, Amazon is "almost cutting out the middleman for the distribution of text and video," said Scott Devitt, a senior analyst with Legg Mason.

Peter Broderick, a consultant in Santa Monica who advises filmmakers on distribution, said that it remained to be seen whether many consumers would be able to find CustomFlix videos on Amazon but that he was excited about the potential.

Said Broderick, president of Paradigm Consulting: This signals that "there are new opportunities out there for filmmakers that are really significant, not just some utopian fantasy,"

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