SEATTLE – Amazon.com Inc. (AMZN) launched a digital video downloading service Thursday, ending months of speculation that the Internet retailer would be getting into the online TV and movie business.
The service, dubbed Amazon Unbox, will offer thousands of television shows, movies and other videos from more than 30 studios and networks, the company said.
TV shows will cost $1.99 per episode, and most movies will go for $7.99 to $14.99; movies can also be rented for $3.99.
Amazon Unbox will offer shows from CBS, News Corp.'s (NWS) Fox, MTV, Nickelodeon, PBS, BBC, A&E, Discovery Channel, Comedy Central and The History Channel, among others. General Electric Corp.'s (GE) NBC and Walt Disney Co.'s (DIS) ABC were noticeably absent on the list of participating networks.
MTV, Nickelodeon and Comedy Central are owned by Viacom Inc. (VIA-B)
Seven major studios are participating in Amazon.com's service: Viacom's Paramount, News Corp.'s 20th Century Fox, Sony Corp.'s (SNE) Sony Pictures, GE's Universal Studios, Time Warner Inc.'s (TWX) Warner Bros., Lionsgate Entertainment Corp. (LGF) and Metro-Goldwyn-Mayer, Inc.
Walt Disney Pictures is not participating. Apple Computer Inc. (AAPL) CEO Steve Jobs is the largest shareholder of Walt Disney Co., and the announcement of Amazon's service comes just days ahead of the expected launch of a movie download service at Apple's iTunes Music Store.
Details of the scope of Apple's expected offerings are unclear, but its pioneering success and market dominance with its iTunes music and TV show downloads as well as its iPod media players have already cast Apple as a leading competitor.
Craig Kornblau, president of Universal Studios Home Entertainment, said Amazon.com's entry into the digital distribution business will help jump-start the still nascent online movie business.
"We're going to have extensive, ubiquitous distribution from a variety of e-tailers," he said. "There are a lot of companies we're talking to."
Amazon.com's catalog of TV shows includes some of the same shows already available on iTunes and Google Inc.'s (GOOG) online video store, including CBS's "CSI" and Fox's "24."
Movies on Amazon Unbox include new releases like "V for Vendetta," "Inside Man," "Brokeback Mountain," "Walk the Line," and "Friends with Money," as well as classics such as "Ben Hur," "Chinatown" and "Poseidon Adventure."
Seattle-based Amazon.com said the service will work on any Internet-connected personal computer running Windows XP, the latest version of Microsoft Corp.'s (MSFT) operating system.
Bill Carr, Amazon.com's vice president of digital media, declined to comment on whether the company would later try to make the service work on machines running Apple's operating system, saying only: "It's our goal to reach as many customers as possible."
When customers download a show or movie, Amazon Unbox will automatically give them a second file that can be viewed on Windows Media-compatible portable digital players.
Another service, called Unbox RemoteLoad, will allow customers to buy from one computer and download to another.
Movies often take an hour or more to download even with a solid, high-speed Internet connection. Unbox will use what's called a "progressive download," which will let people begin watching programs before they're fully downloaded — within five minutes of ordering for the typical cable broadband Internet user, Amazon.com said.
The downloads can be transferred onto DVDs for storage, and the DVDs can be used to play the movie on the computer with that downloaded the movie, but they cannot be played on a regular DVD player.
Benjamin Feingold, president of Sony Pictures Home Entertainment, said offering downloads to a computer or portable device is a good starting point, but the end goal is delivering content to a TV.
"Every little step is a good thing, but ultimately, being able to have a playback in the living room on a larger screen enhances the experience," Feingold said.
Those who rent a movie from Amazon Unbox can keep it for 30 days, unless otherwise noted, but have just 24 hours to view the movie once they start watching it, before it expires.
Studios started renting films online several years ago in hopes of combating illegal downloads. Video downloads have grown more popular since iTunes started selling episodes of TV shows last year.
Earlier this week, Apple sent invitations to the media saying "It's Showtime," for a Sept. 12 event in San Francisco.
Sources at several Hollywood studios confirmed they were in talks to sell their films through Apple's iTunes online store. The executives asked to remain anonymous because talks were still ongoing.
Apple secured landmark distribution deals with major record labels in 2003, jump-starting the legal music download market. It was also the first to introduce TV show downloads last October, for $1.99 apiece.
In June, Apple officials said iTunes had sold more than 30 million videos and was selling videos at a rate of roughly 1 million a week.
Amazon.com shares closed down $1.07 Thursday on the Nasdaq Stock Market, then inched up 17 cents to $29.90 in after-hours trading.
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