Amazon adds streaming video content from CBS

Reuters News
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Posted: Jul 20, 2011 1:00 PM
Amazon adds streaming video content from CBS

By Alistair Barr

SAN FRANCISCO (Reuters) - Amazon.com Inc said on Wednesday it licensed thousands of television shows from CBS Corp, adding content to help the largest Internet retailer compete with giant video streaming company Netflix Inc.

The deal, the terms of which were not disclosed, adds TV series, including Frasier and Cheers, along with the Star Trek franchise, to Amazon's video streaming service.

The content will mainly be available to Amazon Prime customers, who get free shipping and access to video streaming for a $79 annual membership.

The CBS deal increases the number of Prime instant videos to more than 8,000 from about 6,000, Amazon said.

Later this summer, "dozens" of CBS shows will also be available on Amazon's main Instant Video service, with offers over 90,000 movies and TV shows to buy or rent.

CBS Chief Executive Leslie Moonves said the deal is another way for the company to make more money from existing content.

For Amazon, the deal gives it more digital content to sell. The company is a leader in digital books, through its Kindle device and online bookstore. But it is branching out into more digital content, including apps and games, as well as video.

Later this year, Amazon is expected to unveil a tablet computer that could help drive sales of digital content.

These moves increase competition with other digital content providers, including Apple Inc, Hulu and Netflix.

Netflix has about 10,000 videos on its streaming service and could have more than 30 million subscribers by the end of 2011, according to Barclays Capital analysts.

Amazon ended the first quarter with 137 million active users, however. Prime members account for less than 10 percent of those customers, according to Barclays Capital estimates.

J.P. Morgan analysts, led by Doug Anmuth, see Amazon's current streaming video offering mostly as a way to encourage more customers to sign up for the company's $79 Prime memberships.

"If Amazon were to invest aggressively in a stand-alone subscription video streaming product -- unbundled from Prime -- we believe it could make some headway, given Amazon's large existing customer base and potential for subscriber acquisition," Anmuth wrote in a recent note to investors.

(Reporting by Alistair Barr and Lisa Richwine; editing by Andre Grenon)