Amazon is not just betting on drones to deliver its goods in the future; the company is also thinking of expanding its Prime Instant Video by offering live TV streaming services that might compete with cable and satellite TV providers.
People familiar with the matter informed The Wall Street Journal that Amazon begun initial talks with three media companies to license TV channels but there is no certainty if these negotiations will progress.
Licensing for channels is a big hindrance for companies who want to dive deep into TV services over the Internet but Amazon can use its existing relationships with various TV studios and networks to jumpstart its new service.
"We continue to build selection for Prime Instant Video and create original shows at Amazon Studios, but we are not planning to license television channels or offer a pay-TV service," Amazon spokesperson Drew Herdener disclosed in a statement.
It was also earlier reported that the company is coming up with a set-top box that will stream content from the Web.
The company is already challenging Netflix in the subscription-streaming niche through its Amazon Prime that screams best value service with a $79 annual fee that gives consumers access to unlimited viewing of TV shows and movies. The service is also bundled with book rentals for its Kindle tablet and free shipping privileges.
According to analyst Laura Martin of Needham & Co., the revenues of digital video services in the United States jumped to $8 billion in 2013 but is still far from the $150 billion income of traditional TV. However, consumers today will be inclined to patronize paid-streaming services which allow them to watch any content any time they want.
"We believe that all video must think of itself as omni-channel, and therefore the nomenclature of TV content versus digital videos should merge," Martin pointed out.
With net neutrality issues, however, cost for such services might go up for companies which, in turn, might pass it down to consumers.
Nonetheless, one should not forget to add to the equation the potential money TV advertisement will bring in to Amazon once it launches its subscription-based streaming TV service.
