Amazon is reportedly in talks with big entertainment companies to obtain licensing rights for its planned online pay-television service.
Getting hold of TV-channel licenses has been proven challenging for companies aiming to launch Web TV services. They have greatly struggled to bargain licensing terms that would license them to sell their services fiercely.
Media companies, on the other hand, that control television networks and studies try as much as they can not to hurt incumbent pay-TV providers. Their payments for TV channel carriage have a significant role on the entertainment industry’s growth.
However, Amazon has an edge over other startups, like OnCue of Intel, because it has already built a relationship with several TV networks and studios. From there, the American international electronic commerce company can start with the negotiations.
According to a previous report by the Wall Street Journal, Amazon is developing a set-top box to stream video. However, it is still unclear if the company’s venture will take a step forward as it is still in early discussions with media conglomerates.
In a statement late Tuesday, the company said, “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.”
Janney Capital Markets analyst Tony Wible, told WSJ that since Amazon “doesn’t have a legacy margin structure” in the pay-tv business, it can put forward an online-TV service “at cost and generate revenue by selling merchandises through the TV set."
During its meetings with entertainment companies, Amazon said that aside from offering live TV channels, like those in cable or satellite TV, it will also offer in-demand TV shows and movies to its subscribers via its Prime Instant Video service.
