Amazon.com is readying a digital subscription service that would let consumers watch television shows and movies online, according to a report in The Wall Street Journal. Apple is alsolaunching a TV-show rental service, setting the stage for a showdown between the two consumer electronics giants.
According to the Journal, Amazon has been in talks with several major media companies, including NBC Universal, Time Warner, News Corp., and Viacom, about a web-based subscription service that would compete with Apple, Netflix and Google.
Amazon's Digital Target
Apple announced 99-cent TV-show rentals from ABC and Fox on Wednesday. Apple's model will make new shows available for rent starting the day after the original air date. The rental fee allows unlimited viewing for 48 hours.
The Journal reports Amazon's model is shaping up to look more like Netflix with a catalog of older content. The subscription service would make content viewable via a web browser or through Internet-connected devices, including televisions, Blu-ray players and the Xbox 360 video-game console.
Amazon also would also be competing in the same field as Hulu. In June, Hulu unveiled a subscription service that offers viewers access to full seasons of TV shows on a slew of devices. Dubbed Hulu Plus, consumers can tap into the service for $9.99 a month to watch shows whenever and wherever they want.
Phil Leigh, a senior analyst at Inside Digital Media, called the rumored development significant, particularly when put in the context of statistics released in August that show cable-TV subscribers declined.
According to data from SNL Kagan, cable companies saw a dip in subscribers during the second quarter. The cable-TV industry, which has until now experienced consistent growth, shed 711,000 subscribers in the period. Cable's share of pay TV also dipped from 63.6 percent to 61 percent in the second quarter.
"Although it is tempting to point to over-the-top video as a potential culprit, we believe economic factors such as low housing formation and a high unemployment rate contributed to subscriber declines in the second quarter," SNL Kagan analyst Mariam Rondeli said.
Don't Blame the Economy
Leigh agreed that the economy has had an impact on the number of cable-TV subscribers, but he's not willing to blame the economy alone. As he sees it, consumers are fed up with too many commercials and the bundling practices of the cable-TV industry.
With the reported deeper moves into digital media, he said, cable-TV and satellite-TV companies should be worried.