The company is developing a television set-top box and has begun discussions with outside providers of content to distribute their video services to the device, according to three people briefed on the plan, who spoke on condition of anonymity because the Amazon product had not yet been announced and remained confidential.
Amazon is planning to introduce the set-top box in the fall, one of these people said.
Bloomberg Businessweek first reported news of Amazon plans on Wednesday.
Kinley Pearsall, an Amazon spokeswoman, declined to comment.
It was not immediately clear why Amazon would bother designing its own set-top box. The device will most likely showcase Amazon’s own online video offerings, which include Prime Instant Video, a Netflix-like subscription video service with more than 40,000 movies and television episodes that is included as part of Amazon’s broader Prime membership.
Among other benefits, Prime members, who pay $79 a year, get free two-day shipping on orders bought through Amazon’s site.
Amazon also offers a much broader library of video content, totaling 150,000 titles, that anyone, including people who aren’t Prime members, can buy and rent.
But Amazon’s video services are already available on hundreds of devices, many of which connect to television sets, like game consoles, digital video recorders and Blu-ray players. An app for using Amazon’s video service is even embedded in some television sets, including models from Sony, Panasonic and Samsung.
Although Amazon was an early entrant in the e-reader market with the Kindle, the company is late to the market for set-top boxes, where the incumbents include Apple’s Apple TV device and a family of products from Roku.
Amazon, though, has considerable strengths and has shown an aptitude for reinventing itself in new categories, like cloud computing and tablet computers. One media executive who has participated in discussions with Amazon about its set-top box said he thought the company’s standing as a top shopping destination would allow it to promote its new device and give it a strong chance of attracting an audience.
The company could use other creative techniques for getting its set-top box into more living rooms.
Michael Pachter, an analyst at Wedbush Securities, said one approach that could make sense was for Amazon to sell the device for $100 or less, about what Internet set-top boxes cost today, and to include a free year of its subscription video service.
At the end of the term, customers would have an incentive to sign up for Amazon Prime to continue receiving all of its membership benefits, including the video service. “I think this is a Trojan horse to get people to join Prime,” Mr. Pachter said.
Amy Chozick contributed reporting from New York.
Article source: http://www.nytimes.com/2013/04/25/technology/amazon-plans-an-internet-video-device.html?partner=rss&emc=rss
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