Even as chip giant Intel Corp. prepares to enter the Internet-TV market, Amazon.com announced it is expanding its digital library. Last week, CBS said it was selling more of its content to Amazon for use on its Prime Instant Video Service.
Content continues to be a conundrum for hardware makers that want to capitalize on Internet TV and other digital services. Intel, which plans to release a set-top box for Internet TV later this year, hasn’t said what kind of programming it will offer. Although cable subscribers want to be “unbundled” from bulky service packages, content providers aren’t ready to license their programming a la carte – an offering that could differentiate Internet-TV newcomers.
Traditional broadcast networks and cable providers are facing increasing competition from digital platforms such as Netflix and Amazon. At the same time, licensing fees from the online players drive revenue for broadcast stations and premium channels such as HBO and Showtime. Hardware makers may face a different competitive challenge: Amazon sells its only hardware item – the Kindle – for less than its manufacturing costs. Companies such as Intel aren’t used to taking a loss on their products.
Amazon has been very active in acquiring content as of late. It recently struck an agreement to become the online home of the PBS hit "Downton Abbey." Amazon is also moving forward with an aggressive plan to create original shows as it attempts to take on Netflix, which also has a vast library of TV and movie content as well as its own original fare.
Amazon has also secured the rights to stream “Under the Dome,” a CBS miniseries based on the Stephen King book of the same name. Amazon Prime members will be able to watch episodes four days after they are broadcast, while non-members can tap into Amazon Instant Video to purchase any episodes they might have missed.