LOS ANGELES – Amazon.com Inc. (AMZN) is in advanced talks with several major Hollywood studios about creating a service that allows consumers to download and copy movies and television programs, sources familiar with the discussions said on Friday.
The No. 1 online retailer has stayed mum in recent months over plans for a music download service to rival Apple Computer Inc.'s (AAPL) iTunes, as well as film and TV shows from independent producers.
An Amazon spokeswoman declined to comment on Friday about talks with major movie and TV makers.
Several publications reported that Amazon was close to completing a deal with Paramount Pictures, Universal Studios and Warner Bros, specifically, but spokesmen at the three studios either declined to comment or were unavailable for comment.
One source said a deal was not imminent in the next two or three days, but added the studios were enthusiastic and an agreement, if one is concluded, might come soon.
Amazon has been increasing its spending in research and development. Financial analysts have thus far reacted positively to the prospect of Amazon entering the digital download business, which boasts higher margins than the retailer's traditional business. Amazon's investment in technology and content grew 57 percent in the fourth quarter.
The online retailer already owns movie web site IMDB.com, which boasted more than 15 million unique users in February, and sources said Amazon would utilize IMDB to capture movie fans' attention then sell them downloads of films that could then be copied onto DVDs.
DOWNLOAD TO OWN
The studios already own an interest in online service Movielink, but it offers downloads to rent, not to own. The sources had no details on potential prices for the movies that might be offered via Amazon.
Amazon watchers have cited the retailer's experience in selling movies, TV shows and music and say it would be a logical extension of the product lines to have them sell downloadable versions of the entertainment.
Amazon says it has sold more than 55 million active customer accounts.
In February, sources familiar with the matter confirmed that Amazon was in talks with four major music labels on starting a digital music service.
The labels — Universal Music Group, Sony BMG, Warner Music Group Corp (WMG) and EMI Group Plc — would allow Amazon to license their music, and the service has the potential of undercutting Apple's stranglehold on the nascent, but growing industry.
Apple, as of February, had sold 1 billion music downloads at a cost of roughly 99 cents each since it introduced iTunes three years ago.
Warner Brothers is part of Time Warner Inc. (TWX), Universal Studios is owned by General Electric Co.'s (GE) NBC Universal and Paramount is part of Viacom Inc. (VIAB).
In January, media reports put Amazon in talks with three independent movie studios — Image Entertainment, Ardustry Home Entertainment and First Look Home Entertainment — for content.
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