It seems like SVOD services are generally “support businesses” that aim to promote a company’s main product/service that is sold at a higher margin. For instance, DISH Network offers access to Blockbuster SVOD platform as an add-on to its pay-TV subscription (the idea here is to get more pay-TV subscribers). Comcast XFINITY SVOD service is provided on top of other Comcast services and aims to attract more pay-TV and broadband subscribers. We could even argue that Netflix Instant Streaming was first used to support Netflix “DVD by Mail” business (even if it might not be completely the case here).
The margins on those SVOD services are low compare to the “pay-TV or “DVD by Mail” business. In Q3 2012, Netflix contribution margin for its domestic streaming business was 16.4% vs 48% for its domestic “DVD by Mail” business. As pointed out earlier, for SVOD to work, you need volume. Thus, Netflix strong push for its international expansion. Amazon might pull it off, but it will require significant investment outside the US to work out.