Jul 18, 2008

Business - Amazon plans an online store for movies

In a significant step toward vanquishing the local video store and keeping couch potatoes planted firmly in front of their televisions and computers, Amazon.com will introduce a new online store of TV shows and movies, called Amazon Video on Demand.Customers of Amazon’s new store will be able to start watching any of 40,000 movies and television programmes immediately after ordering them because they stream, just like programmes on a cable video-on-demand service. That is different from most Internet video stores, like Apple iTunes and the original incarnation of Amazon’s video store, which require users to endure lengthy waits as video files are downloaded to their hard drives. “For the first time, this is drop dead simple,” said Bill Carr, Amazon’s vice president for digital media. “Our goal is to create an immersive experience where people can’t help but get caught up in how exciting it is to simply watch a movie right from Amazon.com with a click of the button.” Amazon, which is based in Seattle, is also pursuing the technology and media world’s Holy Grail - an Internet pipeline to the TV. It has struck a deal with Sony Electronics to place its Internet video store on the Sony Bravia line of high-definition TVs. The video store will be accessible through the Sony Bravia Internet Video link, a $300 tower-shaped device that funnels Web video directly to Sony’s high-definition televisions. That is an awkward extra expense, for now. But future Bravias are expected to have this capability embedded in the television, making it even easier to gain access to the full catalogue of past and present TV shows and movies, over the Internet, using a television remote control. Carr said Amazon would pursue similar deals with other makers of TVs and Internet devices. “We can support both streaming and downloading,” he said. “Our goal is to continue to establish partnerships with all companies who have a connected device.” Amazon Video on Demand will be accessible to a limited number of invited Amazon.com customers on Thursday before it opens more broadly to other users later this summer. Films and TV shows from almost all the major studios and television networks are available for sale or rental to Amazon’s customers in the United States, at varying prices depending on the program and whether people buy or rent it. The lone holdouts are Walt Disney and ABC, which Disney owns. Both have close relations with Amazon’s digital rival, Apple. Although Amazon does not release revenue numbers for its digital initiatives, its 10-month-old digital music store, Amazon MP3, is viewed favourably as a solid runner-up to iTunes from Apple. But it is far behind iTunes, which recently surpassed Wal-Mart Stores as the leading supplier of music in the United States. Amazon Unbox, the company’s original download-only video store, was largely seen as a disappointment because it required customers to download special software to watch the programmes they bought. The service also worked only on Windows PCs and TiVo set-top boxes. To make the new service more enticing, the first two minutes of all movies and TV shows will begin playing for users on Amazon.com immediately when they visit a title’s product page on the digital video store. It will also let users buy a TV show or movie without actually downloading the video file to the PCs hard drive. Amazon will store each customer’s selection in what it calls “Your Video Library.” Customers can then watch that show or movie whenever they return to Amazon, even if it is from a different computer or device, a solution that neatly gets around studio concerns about piracy. “I can be at my office, purchase a movie, and then it will be available on my television at home,” said Robert Jacobs, a senior manager at Sony Electronics. “Creating this on-demand available-everywhere access to premium content is going to be very attractive to consumers.” Amazon will have some formidable rivals if it hopes to dominate the emerging world of digital video. Apple, Microsoft, Google and Netflix are all looking to capture the coveted real estate in the living room as well. Apple has had the most success with video on its iTunes video store and its Apple TV set-top box. It recently added content from several movie studios and introduced video rentals to the service. Amazon Video on Demand is not expected to generate significant profits for Amazon, which must pay large royalties to Hollywood studios and develop the costly technical infrastructure required to make the service operate reliably. But Jeff Bezos, Amazon’s chief executive, may have another goal in mind. Establishing a foothold on televisions could be a way to let couch potatoes and television advertisers link up to the rest of Amazon’s online store with a click of the remote control. “That is certainly a possibility for the future,” Carr said.—NYT

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