Amazon.com is about to order up the latest shakeup for Hollywood’s homevideo biz.
The e-tailer plans to offer a single subscription fee for unlimited streams or downloads of movies and other entertainment fare through its Amazon Prime service that will provide studios with yet another digital platform through which they can generate revenue for their projects outside the megaplex.
Official plans have yet to be unveiled, but the company let it slip to Amazon Prime’s existing members Tuesday that it will soon offer “unlimited, commercial-free, instant streaming of 5,000 movies and TV shows.” That could start as early as the end of the month, insiders at the company say.
Amazon has already been selling and renting digital downloads of movies, but only on a per-title basis through its Amazon Video On Demand service.
Amazon’s expanded move into the streaming biz had already been hinted at with its decision last month to acquire British streaming and DVD rental service LoveFilm (which has 1.6 million customers).
Using that company’s assets to rollout a global digital service was inevitable. Digital has yet to overtake the dollars traditional homevideo earns for studios, but the impact on the bottomline at those divisions around town has been hard for Hollywood to ignore. Its effect on the industry’s future is unavoidable now that services like Netflix appear on everything from iPhone and iPad screens to set-top boxes from cablers and companies like Apple, Google, Roku and Boxee, inside Blu-ray players, videogame consoles and TVs that connect to the Internet. By being ubiquitous, Netflix accounts for 20% of all U.S. Internet traffic during primetime hours.
Once launched, Amazon’s service will clearly create another rival to Netflix, which already has been fending off similar streaming offerings from Walmart’s Vudu, Best Buy’s CinemaNow, Blockbuster’s On Demand, and video-on-demand rentals from the major cable and satellite providers. Redbox is also prepping its own digital service to go along with its $1-a-day kiosk biz.
But Amazon now needs the content to offer consumers, which will help fill studio coffers. The company has started talks with the studios to increase its library of digital pics, but none of the majors have yet to agree to a distribution deal with Amazon just yet.
As Netflix bulks up the kind of fare it offers up as digital streams, the company is ponying up considerable coin to lock down those deals. And studios are said to be seeking the same kind of top dollar from Amazon, as well as a 28-day-delay for new releases.
Studios are increasingly worried that digital distributors are turning into rivals to pay cable channels, which still serve as a lucrative source of revenue.
Amazon’s executives will have to figure out just how much they want to spend to compete with Netflix, which just keeps growing its customer base — it’s now up to 20 million. Netflix agreed to pony up around $1 billion to Epix over five years, and will likely have to pay more to lock down a new deal with Starz as early as this year.
Either way, Amazon’s move will likely ignite a price war that will heat up across the digital homevideo biz.
Amazon Prime charges customers $79 a year for free two-day shipping on products, as well as discounts on products sold by third parties.
Netflix’s monthly digital service that offers unlimited streams is priced at $7.99 a month, or $95.88 a year.