Amazon.com plans subscription online TV

Amazon.com has approached media companies with a proposal for a subscription service that gives users unlimited access to some television shows and movies over the internet in a bid to rival Netflix, two people familiar with the talks said.

The Seattle-based online retailer has approached media companies including Time Warner, CBS and Viacom, these people say.

It is still not clear if the media companies would agree to Amazon's proposals which are still at an early stage, according to one person familiar with the talks.

Amazon's website already features a range of TV shows and movies in its video-on-demand section that are generally available for sale individually from US$1.99 (NZ$2.83).

But an Amazon subscription service would likely be similar to Netflix's online streaming service which works in tandem with its DVD rental business.

Like Netflix most of the TV shows and movies available for streaming would be older because the media companies are wary of devaluing their content, said the same person familiar with the talks.

News of the Amazon proposal was first reported by the Wall Street Journal which said General Electric's NBC Universal was also approached.

Amazon did not return calls seeking comment. CBS, Viacom Time Warner and NBC Universal declined to comment.

The Journal reported that in at least one version of Amazon's proposal, subscriptions could be bundled with its existing Amazon Prime service immediately, giving the service a large number of built-in subscribers.

Prime is a service that offers members free 2-day shipping on most Amazon purchases for US$79 a year.

The news comes as more companies try to boost their online TV businesses.

Hollywood studios and media companies are vying to boost their online businesses, in part to stem online piracy of their content and also because of the higher margins they receive on digital sales.

Apple is expected to unveil the latest version of its Apple TV product on Wednesday. The new service is expected to offer TV shows for rent at 99 cents each. Bloomberg said the new service will feature Netflix's online service. Netflix declined to comment.

Google has also been eyeing a TV or movie subscription service for its YouTube website. It has had ongoing conversations with several studios in the last year as well.

At the same time, studios have reacted with some unease to the shift in distribution of movies and TV shows to the web, given that they have lucrative deals with cable providers to air that content.

Last year, online sales and streaming of movies amounted to US$300 million in the United States, and US$340 million for TV shows, according to Adams Media Research.

NBC Universal, News Corp's Fox Broadcasting and Walt Disney's ABC network have collaborated to offer online streaming of shows at Hulu.com, but one of the fastest areas of digital distribution of Hollywood content has been Netflix's online streaming service.

- Reuters