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Amazon nears deal with Viacom as it readies standalone video subscriptions

post #1 of 10
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Amazon is reportedly close to finalizing a Web video licensing agreement with Viacom and is nearly ready to launch a standalone video subscription service that would challenge Netflix.

People familiar with the negotiations between Amazon and Viacom told Reuters that a deal could be announced as soon as this week. Viacom CEO Philippe Dauman teased last week that the company would announce a new online deal this week, but he declined to provide more details.

Amazon has already reached agreements with major studios including CBS, Warner Bros, Fox, Sony, NBC Universal and Walt Disney for its Prime Instant Video service, but the company is believed to have ambitions for a standalone service as well. People who have spoken with Amazon executives told the publication that the online retailer is looking to create a non-Prime video service to spur sales of the Kindle Fire tablet.

Multiple sources said Amazon is currently in negotiations with Hollywood studios to expand its licensing rights and add to its library. Though the company does compete with Apple's iTunes to offer digital videos for purchase or rental, it is apparently also set on going after Netflix in the subscription video market.

The Kindle Fire arrived last November with a low $199 price tag. Amazon bundles a 30-day free trial of Amazon Prime with the tablet in hopes of drawing customers into its ecosystem. Prime costs $79 a year and offers customers free two-day shipping in the U.S. for most items in addition to access to video content.

The company relies heavily on content sales since the Fire is believed to be sold at a loss. Amazon's net income declined by 57 percent last quarter even as Kindle sales shot up by 177 percent year over year. The company declines to provide specifics on how many Kindle devices it has sold, though it has indicated that sales are in the "millions of units."



Analysts on average believe Amazon sold five million Kindle Fire units last quarter, though Sitfel NIcolaus' Jordan Rohan estimated last month that the company shipped as many as six million during the period.

A recent survey revealed that 29 percent of Kindle Fire owners, which made up six percent of respondents, plan to spend more at Amazon over the next 90 days. That's compared to an average of 20 percent of consumers. The company could, however, face problems with customer satisfaction, as the same survey showed that only 54 percent of Kindle Fire owners are "very satisfied" with the device, compared to 74 percent of iPad owners who answered a November survey.

Downloads of Amazon's video offerings saw healthy growth last quarter after the Kindle Fire release. Instant video purchases or rentals more than doubled during the December quarter, while the number of Prime Instant Video streams jumped up almost 300 percent year over year, the company said last month.

For its part, rival Apple has reportedly been met with resistance in its own efforts to negotiate subscription streaming deals from Hollywood and TV studios. Last November, CBS executive Les Moonves revealed that he had rejected an "advertiser split" online streaming offer from Apple because it refused to enter into "success-based or non-guaranteed" agreements.

Sterne Agee analyst Shaw Wu said late last year that Apple hopes to offer content subscriptions with customized channel lineups, but licensing agreements for such a service have turned out to be "much more complicated" than current deals. Separately, Jefferies analyst Peter Misek said he believes Apple may choose to work with existing cable providers for its rumored connected television set. His claims gained some credibility soon after when The Globe and Mail reported that Canadian telecommunications companies Rogers and Bell Canada already have a prototype "iTV" in their labs.

[ View article on AppleInsider ]
post #2 of 10
It seems strange to hear Amazon going after Netflix's lunch. In the 90s Microsoft would've been all over that, and everyone else's lunch.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #3 of 10
Unless you can exceed the paltry movie streaming options of Netflix, then keep on walking.
post #4 of 10
Quote:
Originally Posted by AppleInsider View Post

For its part, rival Apple has reportedly been met with resistance in its own efforts to negotiate subscription streaming deals from Hollywood and TV studios. Last November, CBS executive Les Moonves revealed that he had rejected an "advertiser split" online streaming offer from Apple because it refused to enter into "success-based or non-guaranteed" agreements.

No shit.

Amazon had the red carpet rolled out for them because they signed up for Ultraviolet (Hollywood's iTunes DRM alternative).

Studios don't want Apple to control movies like they do music. Miramax even called Apple a bigger threat to the Movie industry than piracy.

This has very little to do with Netflix and a lot to do with Hollywood giving Apple the middle finger.

Apple are going to continue to get the cold shoulder unless they:
  1. Sign up for Ultraviolet
  2. Start throwing that $100 billion around Hollywood
  3. Follow Microsoft's lead with Xbox and play ball with the pay tv providers

I can't believe this wasn't even mentioned in the article!
post #5 of 10
Quote:
Originally Posted by Firefly7475 View Post

No shit.

Amazon had the red carpet rolled out for them because they signed up for Ultraviolet (Hollywood's iTunes DRM alternative).

Studios don't want Apple to control movies like they do music. Miramax even called Apple a bigger threat to the Movie industry than piracy.

This has very little to do with Netflix and a lot to do with Hollywood giving Apple the middle finger.

Apple are going to continue to get the cold shoulder unless they:
  1. Sign up for Ultraviolet
  2. Start throwing that $100 billion around Hollywood
  3. Follow Microsoft's lead with Xbox and play ball with the pay tv providers

I can't believe this wasn't even mentioned in the article!

IMO-Would be nice if Apple could get a subscription service to a historical movie library similar to turner classic movies. So yeh... They need to spend some dough to break the mold. Hollywood learned their lesson with iTunes.... Don't give Apple anything. The other nut to crack is live events. Not sure how Apple can crack that nut.... Big $$$ involved. Ultimately I just see Apple offering great interfaces to the content providers. We still get stuck with the all or nothing bill from them.
Hokey religions and ancient weapons are no match for a good blaster by your side, kid.
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Hokey religions and ancient weapons are no match for a good blaster by your side, kid.
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post #6 of 10
Quote:
Originally Posted by Firefly7475 View Post

No shit.

Amazon had the red carpet rolled out for them because they signed up for Ultraviolet (Hollywood's iTunes DRM alternative).

Studios don't want Apple to control movies like they do music. Miramax even called Apple a bigger threat to the Movie industry than piracy.

This has very little to do with Netflix and a lot to do with Hollywood giving Apple the middle finger.

Apple are going to continue to get the cold shoulder unless they:
  1. Sign up for Ultraviolet
  2. Start throwing that $100 billion around Hollywood
  3. Follow Microsoft's lead with Xbox and play ball with the pay tv providers

I can't believe this wasn't even mentioned in the article!

They need to do something. It's silly to expect Amazon to beat them with only $177 million in profit compared to Apple's $13,060 million in profit. There is an argument to be made that money isn't everything but we're not talking about innovation here, we're talking about paying companies that want money. Maybe Apple has found a way around it that doesn't require them to pay directly to these content owners. I hope so because I really do hate the clunky setup I have with my cable company.


Quote:
Originally Posted by boeyc15 View Post

IMO-Would be nice if Apple could get a subscription service to a historical movie library similar to turner classic movies. So yeh... They need to spend some dough to break the mold. Hollywood learned their lesson with iTunes.... Don't give Apple anything. The other nut to crack is live events. Not sure how Apple can crack that nut.... Big $$$ involved. Ultimately I just see Apple offering great interfaces to the content providers. We still get stuck with the all or nothing bill from them.

I thought Apple would have created their own original programming by now. I guess not.

I had also expected for Apple to at least come up with a patent idea that would let you copy TV shows and movies from their iTunes Store that had ads built in. Not in the static sense like when you record from a DVR, but with predetermined slots so the ads can be updated as the content owners see fit. So even if you watch the video one year from now the ads would be pulled over a network connection to make them relevant to the content owner's current ad support.

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"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

 

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post #7 of 10
I love Amazon Prime for the two-day delivery, but I rarely watch the free videos because the selection and UI are both pretty terrible.

If I could get Netflix-quality selection (which isn't spectacular itself) and still get two-day delivery on shipped items, I'd pay $10 a month for that.
post #8 of 10
Quote:
Originally Posted by Porchland View Post

I love Amazon Prime for the two-day delivery, but I rarely watch the free videos because the selection and UI are both pretty terrible.

If I could get Netflix-quality selection (which isn't spectacular itself) and still get two-day delivery on shipped items, I'd pay $10 a month for that.

I would actually argue that netflix sucks. I use it on my PS3 and there s wayyyyyy too much stuff missing. Things like pawn stars for instance.

itunes and amazon aren't that bad. Much rather them over netflix.
post #9 of 10
If they want success, they need Amazon Instant Video on more devices. Despite having Amazon Prime, I never watch the videos. Why? Because I don't want to sit in front of my PC. I can't watch using any of my iOS devices, I can't watch on an AppleTV, I can't watch on my PS3, I can't watch on my Xbox (standalone).

Netflix didn't take off until it penetrated every single device we consume media with.

Is Amazon prevented from doing the same due to its licensing deals? Or are they intentionally not supporting devices in the hope of selling their own hardware? I would think the former, as they make money on the content ( as opposed to Apple), and should be device agnostic.
post #10 of 10
The content providers have always hated Apple.

Apple wanted DRM free ACC in Itunes. Content providers refaced.
Later the same content providers licensed DRM free MP3s to Amazon and others.

Apple had to change its price structure to content providers liking before they were allowed to take away DRM. Still today many "experts" believe that Itunes music is DRMed.

We now see the same song and dance number again. But this time we don't have Jobs that convoke content providers to make things easy.

Easy=More sales=More money for the content providers.
But they don't understand.

Only legal users sees DRM. All prorated stuff have ripped it out. They are punishing the people who are legal.

Take DVDs. Legal DVDs have Macrovision. Non legal DVDs have ripped out Macrovision. The picture quality is much better without macrovision.

This is also the reason why we don't have Blu ray movie player support on mac (and wont get it. Totally Insane DRM)
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