Amazon is, famously, minimally forthcoming with the press regarding its plans and metrics. And few publicly traded companies would feel compelled to comment on a story as speculative and thinly sourced as the Wall Street Journal‘s report this week that Amazon is in talks with media companies to license live, linear TV rights for an over-the-top pay-TV service. “We don’t comment on rumors and speculation,” would be standard and perfectly legitimate response.
So it was a bit puzzling to see Amazon actually issue an on-the-record denial of the report. In fact, it went out of its way to issue the denial. According to the Journal, Amazon initially declined to comment on the story, but then apparently had a change of heart and released this official denial:
We continue to build selection for Prime Instant Video and create original shows at Amazon Studios, but we are not planning to license television channels or offer a pay-TV service.
I would have loved to have been a fly on the wall in Amazon’s PR shop while that about-face was being ordered up. Wowza.
Perhaps someone at Amazon got spooked at just how expensive what the Journal was reporting would sound to Wall Street. Amazon is also famous for not overly prioritizing delivering profits to investors, but there’s no way that it would not lose hundreds of millions of dollars standing up a live, linear TV service. The rights costs would be immense (ask Intel) and even by the Journal‘s report, “Amazon hasn’t yet determined its business model for a virtual cable-TV service.”
Yikes! That one might be worth shooting down right away, even if you think you might someday want to consider offering such a service (you may not be “planning to license television channels or offer a pay-TV service” today, but plans can change).
In any event, I don’t see the strategic upside for Amazon to getting into the cable-TV business. As I wrote last year, when reports of an Amazon set-top box first surfaced, it seems far more likely that Amazon would be focused on enhancing the live, linear viewing experience without having to actually acquire the rights to deliver that service itself:
Advertising/1-Click Ordering: Amazon launched a mobile ad network last year for placing ads on Kindles and other Android-based and Apple devices that can display ads along with Amazon’s familiar “Buy” button, it’s first effort to leverage the immense trove of data it holds on its users’ purchasing history. But it’s ambitions in the ad space are clearly much bigger. The e-retailer has quietly been building aproprietary real-time bidding platform that plugs into exchanges allowing Amazon to target its users anywhere on the web. Extending that hyper-targeting capability to the living room, especially if coupled with a second-screen link (think something analogous to Microsoft’s SmartGlass technology) to support an immediate call-to-action by the advertiser — including immediate purchase via Amazon — could be extremely powerful.
IMDb/Discovery: Last year, Amazon introduced “X-Ray for Movies,” a feature that leverages metadata from IMDb to enable viewers to identify actors in movies on the Kindle Fire HD and call up information about other movies they’ve been in. Last month, it extended X-Ray to TV shows on the Kindle Fire. If that capability could be extended to linear TV via a set-top box, perhaps by marrying X-Ray with Automatic Content Recognition technology, it could enable Amazon to build a powerful discovery/recommendation engine based on what users are currently watching and what additional information they may have browsed on a second screen while watching it.
Those views have only been reinforced for me with the rollout of the Kindle Fire HDX, which includes some as-yet-undisclosed technology for linking the tablet with an as-yet-undisclosed set-top box(es).