Amazon Reportedly Planning Internet TV Service as Intel Sells Theirs
Just as word of the demise of one carrier-independent internet TV prospect, Intel TV, hit the internet, another promising prospect took its place: Amazon.com Inc. is reportedly in the early stages of working on its own new online pay-TV service.
Amazon -- the world's largest online retail company, which also offers the subscription streaming TV and movie video service Amazon Prime Instant Video -- is approaching big media companies about possibly licensing their television channels for a new so-called over-the-top (internet-based) pay-TV service.
The internet television service would feature live TV channels, whereas Amazon's Prime Instant Video only delivers on demand movies and TV shows, much like its rivals Netflix and Hulu Plus. Though the project is reportedly in its early stages, according to The Wall Street Journal, and an Amazon spokesperson declined to comment on the report, the TV service would definitely put Amazon on the top-tier of streaming internet video services -- if talks with content providers prove successful.
Amazon has reportedly broached talks with at least three large media companies, according to an unnamed source for the Wall Street Journal, with the goal of obtaining rights to their channels.
This is not the first attempt to coax large TV content providers into accepting a deal for an over-the-top live TV service, though. Today Intel announced it was selling Intel Media to Verizon Communications, after a failed attempt at the same gambit.
Intel TV promised to offer live and on demand television streaming over the internet and had accomplished the technical side of its OnCue Cloud TV project, but the initiative was scrapped by Intel's CEO after failing to acquire enough content to truly be a successful competitor to satellite and cable companies. Instead, Intel sold the technology to Verizon, which, as a television carrier, already has pre-established relationships with big media companies.
Media companies, which own large swaths of pay-TV channels, are loath to give up the bundle deals they traditionally have with cable and satellite providers. Fiscally, these bundles make sense by helping to cover costs of more expensive live television, especially live sports like ESPN. Unfortunately, for consumers, making customers buy TV channels in pre-packaged bundles forces them to pay more for channels they would never want or watch.
Over-the-top (streaming internet) TV holds the promise of breaking up these bundles and allowing customers to subscribe only to the TV channels they want, a la carte -- which is a dirty word in the big media world -- or at least to buy channels in smaller bundles. It also holds the promise of far superior user experiences, since the companies attempting to launch over-the-top TV services, like Sony, Intel, and Google, are also technology companies. Gone would be the days of lagging channel menus, crashing cable boxes, or vanished DVR recordings.
The status quo doesn't look good for cable companies, as 2013 proved that the "cord-cutting" phenomenon -- customers abandoning traditional cable for internet streaming services -- is very much real. But big media companies will resist any change to their business model.
At least Amazon is perhaps the best-poised company to attempt an internet TV service. According to The Wall Street Journal, Amazon spent about $1 billion for content for its various media offerings in 2013, which actually hurt Amazon's bottom line. In any case, the company has built pre-existing relationships with some TV content providers -- but even with that advantage, Amazon has a long way to go before it starts offering customers live streaming TV. Amazon's drones might be delivering packages by the time Amazon delivers on live internet TV.
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