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Amazon: We're Not Pursuing An OTT Pay-TV Service

Amazon denied a report claiming that the online retailing giant is exploring a virtualized pay-TV service that would be delivered over-the-top and offer a lineup of live TV channels that would compete with cable MSOs, telcos and satellite TV service providers.

The Wall Street Journal reported Tuesday that Amazon had contacted at least three big media companies about distribution and licensing deals for such a project, but warned that Amazon’s idea was in the “early stages” and may never see the light of day, noting that the company was still trying to nail down a business model for a virtual pay-TV offering.

Amazon was not immediately available for comment Tuesday afternoon, but this evening issued a statement to multiple media outlets, including USA Today (opens in new tab) and Variety, denying that it is working on such a service. "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," company spokesman Drew Herdener said in a statement.

In a 60 Minutes segment last month, Jeff Bezos sidestepped questions about Amazon’s rumored set-top box project, telling Charlie Rose to “stay tuned” regarding his company’s future device roadmap. 

Word of Amazon’s purported interest in developing a virtual MSO services comes soon after Intel Media punted on the idea because it believed it lacked the scale to pull off such a service on its own, instead opting to sell its “OnCue” assets to Verizon Communications. Sony announced at this month’s International CES that it plans to start testing a pay-TV offering in the U.S. later this year that will include live TV, VOD and DVR services. Google, meanwhile, has been rumored to be working on a virtual MSO service.

Although Amazon denied it is exploring an OTT TV service, some analysts believe the company, which already owns a cloud-based video architecture in the form of Amazon Web Services and access to a massive base of customers, has the elements required to launch, operate and maintain a low-margin, OTT video subscription service that can compete with traditional pay-TV providers.

“Today’s MVPDs (multichannel video programming distributors) are designed to generate a profit but there is ample room for new companies to run at a lower margin or in the case of AMZN price at cost to generate revenue from the sale of merchandise sold through the TV,” Janney Capital Markets analysts Tony Wible and Murali Sankar wrote in a research note issued last week, according to Variety.