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In November 2010 Netflix announced a new lower price for streaming video direct to home televisions....

In November 2010 Netflix announced a new lower price for streaming video direct to home televisions. At the time, Netflix had no serious competitors- Netflix's share of the digital download market was more than 60% (the second firm's was only 8%). Just three months later, Amazon announced that it was entering the market for streaming video. How are these two announcements related?

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Answer : After announcement of Netflix about lower price of streaming video Amazon's announcement came that Amazon enters in streaming video market. This means that in streaming video market Netflix and Amazon are competitors with each other. Because of competition Amazon will reduce the price level more than Netflix to sell more and to earn more. This is a form of duopoly market structure. As both Netflix and Amazon announcements are about the streaming video market and as from the above discussion we get that both announcements are related to price level, hence we can say that both announcements are related with each other.

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