Amazon said to be launching movie service to rival Netflix

LOS ANGELES — Amazon.com is gearing up to be the first direct competitor to Netflix’s popular online movie service.

The Web’s biggest retailer has held talks with Hollywood
studios and several independent companies about acquiring library
content for a subscription movie streaming service similar to Netflix, according to people familiar with the matter.

The online retail giant has scooped up rights to some independently produced movies but has yet to strike a deal with any of Hollywood’s big six studios, those people said.

Amazon.com Inc.
has told studio executives that the company wanted to launch the
service in early to mid-February but has delayed those plans until at
least later in the month to deal with technical glitches and to acquire
more content. It is unclear when the service will go live.

Studio executives say they are weighing several
issues as they considered signing up with Amazon, including whether the
retailer would be willing to pay as much for content as Netflix Inc., and how it might affect the sale of DVDs and the value of current and future distribution deals with cable networks.

A spokeswoman for Amazon, which already rents and
sells digital copies of movies and television shows on an
individual-transaction basis, declined to comment.

Amazon is not the only Web-based company looking to take on Netflix,
though it does appear to be the furthest along. Online television
distributor Hulu has talked to several studios about adding films to
its subscription service Hulu Plus, according to people close to the
situation. Netflix
has a growing amount of TV content, which has already put the two
companies into competition. However, Hulu has never before featured
movies in its subscription offering.

Many potential competitors have been eyeing the success of Netflix,
which added 7.7 million subscribers in 2010, bringing its total to 20
million, and saw its stock price more than triple in the last year.

A spokeswoman for Hulu declined to comment.

Both Amazon and Hulu are looking primarily at older
movie titles that have completed their runs on pay-cable networks such
as HBO, Epix and Starz, meaning it would be at least seven years after
their theatrical release. Acquiring rights to movies currently airing
on pay cable, as Netflix has done in deals with Epix and Starz, can be very expensive. Netflix is paying Epix up to $1 billion over five years.

As previously reported when Amazon first began seriously considering launching an online offering similar to Netflix’s last summer, the service will be part of the company’s Amazon Prime. People who pay $79 a year for unlimited shipping would also get free access to streaming movies. That’s less expensive than even the cheapest Netflix plan, which costs $95.88 a year but includes significantly more content than Amazon is likely to have initially.

Though Amazon has yet to set a launch date, a screen
shot featured on the technology blog Engadget over the weekend showed
what appeared to be a subscription streaming option for the movie “The
Girl Who Kicked the Hornet’s Nest.” It appears that “Hornet’s Nest”
distributor Music Box Films will be part of the Amazon service when it
launches.

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