Amazon is already the 800-lb. gorilla mail order company in the US for everything from cereal to LCD TVs. They've had a VOD store for a while now, with neither taking a foothold in a significant way. If they buy NetFlix, that exponentially expands Amazon's footprint and price control abilities.
Allow me to explain:
I know a number of people who are big fans of Netflix Watch Instantly, particularly due to the buffet style of all-you-can-watch on the service. In the acquisition, Amazon would have to leave this service fully intact or potentially lose subscribers. You can't regress in the VOD game, only forge on. Taking this for granted, Amazon could cherry-pick which titles you have to pay a VOD rental on and which ones are "free" (since you have to be a subscriber to get Watch Instantly). Existing Watch Instantly devices would undoubtedly gain Amazon VOD rental abilities.
The muscle of Amazon behind a set top box-based, High-Definition VOD library with the reach of Netflix could finally push VOD toward full-fledged mainstream viability. With Blu-ray player and HDTV manufacturers building WiFi and Netflix WI into their new devices on top of the XBox 360 already having it, there's more "standardization" at play than during any format war in history.
There will be multiple ways to access the content for a service many already subscribe to, but don't have a way to plug into their TV. Inexpensive dedicated devices like the Roku Player are out there too. The prices on those are closer to that of a standard-def DVD player than the $300-400 ballpark for a decent-quality Blu player. There's not even a requirement to have an HDTV, just an internet connection.
Potential competition could come from Best Buy and TiVo, who have also been rumored for merger. BB even has their own in-house hardware manufacturer (Insignia).
This is all theoretical, but completely plausible. If either AmazonFlix or TiVoBuy (or both) build current episodes of popular TV shows into their model, conventional broadcast networks could be completely doomed. Of course, across-the-board metered broadband pricing could then become the cable/DSL companies' revenge.
"Want to stream VOD content? Free if you subscribe to cable and use the options we provide you, but if you stream to a player, we're going to gouge you like cell companies when it comes to international data roaming."
Does anyone doubt major corporations are at this moment plotting how to dominate the streaming business and stifle competition? Send me your thoughts and I'll run them later in the week.