The shifts in the way we purchase and consume entertainment products was again thrown into stark relief as upbeat quarterly results from Amazon and Netflix contrasted cruelly with stories of investors picking over Blockbuster and HMV.

The shifts in the way we purchase and consume entertainment products was again thrown into stark relief as upbeat quarterly results from Amazon and Netflix contrasted cruelly with stories of investors picking over Blockbuster and HMV.

Amazon’s net sales growth exceeded analyst expectations, rising 38% to $9.86bn (£6.3bn). In North America sales soared 45%, while international sales - the UK, Germany, Japan, France, China and Italy - rose 31%. Worldwide media sales grew 15%, as electronics and general merchandise were up 59%. Meanwhile, Netflix reported a 43% increase in revenue to $706m (£452m).

Amazon has highlighted its investment in innovation and this is currently underpinning its success. A host of services and initiatives were introduced during the first quarter, including Kindle library lending, audiobooks on Kindle, an Appstore for Android, Amazon for Windows Phone 7, Checkout by Amazon in Germany and the UK, a Kindle store in Germany, Cloud Drive, Cloud Player and Prime Instant Video.

Also, both Amazon and Netflix can be proud of their efforts to internationalise their businesses, with Amazon announcing it is to expand its distribution capacity in Germany, a market in which many other ecommerce initiatives have foundered, while Netflix confirmed it is planning to enter two new overseas markets this year (possibly including the UK), less than a year after entering its first international territory, Canada. Perhaps most interesting of all is Amazon’s offer of free shipping from the Amazon UK site to India, South Africa, Australia and New Zealand. Customers spending more than £25 on items sold direct by Amazon will be entitled to free shipping until May 15. The move could well signal that Amazon is testing out these markets for future expansion.

Nevertheless, innovation and internationalisation can be rendered redundant, as HMV is finding, in the headwind of shifting consumer behaviour. The trend towards streaming subscriptions, particularly strong in the US, has played a large part in the success of Amazon and Netflix, and the demise of Blockbuster. Competition will also intensify as Dish Network’s successful acquisition of Blockbuster in the US, and a recent tie up with HBO, point to its intentions in this space. Netflix is expecting Dish Network to launch a “substantial streaming effort” under the Blockbuster brand.

Matthew Stych, research director, Planet Retail.

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