The Giant And The AMAZON -- Etailer To Take On ITUNES

(From Cynopsis -- By Daisy Whitney)

The mad rush is on.

APPLE's been ruling the music and video player market with crushing dominance for the last year, and now it's got some competitors nipping at its heels and its gigantic head start.

AMAZON next month plans to launch an Internet TV and movie download service along the lines of ITUNES, according to industry reports.

Similarly, MICROSOFT has been developing a portable music player and service, that could likely be the springboard for a video player to challenge APPLE's ITUNES.

"Most companies were asleep at the wheel with music downloads and now it's a one-dominant-company market with Apple running the show," said KAAN YIGIT, analyst with SOLUTIONS RESEARCH GROUP.

"Also the size of the prize in the movie and video market is larger potentially in terms of revenue potential -- not only in terms of sale of downloads but sponsor and ad revenue,"
he said.

AMAZON DIGITAL VIDEO has been in development for a year and will include both subscription options and a download fee for movies and TV shows, according to an ADVERTISING AGE story. The service requires users to install Amazon software on their machines, much like iTunes. Advertising Age likens the Amazon subscription option to the NETFLIX movie rental model.

Amazon spokesman SEAN SUNDWALL declined to comment.

Amazon has already taken its first steps into the online TV business. The internet retailer introduces new episodes of AMAZON FISHBOWL WITH BILL MAHER, a weekly interview show, every Thursday night. The episodes are then available throughout the week.

But cable executives point out that Amazon will face some challenges in the subscription arena because premium move services have exclusive subscription rights to much of Hollywood's first-run output.

"There is still a general learning curve about subscription rights and what can and cannot be offered. There are pre-existing, long-term contracts for almost all of Hollywood's film output for electronic distribution by subscription to the pay TV programmers for many years and this lasts into the next decade," said
BOB GREENE, Executive Vice President of Advanced Services for STARZ ENTERTAINMENT GROUP.

As the largest Internet retailer with brand name recognition that extends much deeper than iTunes, Amazon's entrance in the TV market has the potential to send shock waves throughout the TV industry and to shake up the suddenly red-hot space of download-to-own TV and movies.