With Elemental Buy, Amazon May Be Planning Pay TV Service

According to several sources, Amazon is reportedly looking into the logistics and costs of creating an online pay TV service by talking with multiple content owners about carrying their channels. These talks — with CBS and Comcast’s NBCUniversal — have been going on for several months, say the sources. Amazon already offers content via its Prime Instant Video streaming service, as well as producing its own TV content. A live service would put it in direct competition with other pay TV providers such as Comcast and AT&T.

Bloomberg notes that companies either already offering or experimenting with offering bundles of channels include Sony, Dish Network and Apple. One clue to Amazon’s plans is its recent agreement to acquire Elemental Technologies, “a cloud-based platform for ingesting, encoding, protecting and packaging live linear streams,” says Frost & Sullivan principal analyst Dan Rayburn in Streaming Media.

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“While Amazon has already confirmed they plan to integrate Elemental’s live linear platform into their AWS platform and offer it as a service, acquiring Elemental will also give Amazon their own in-house platform needed to make an Amazon branded live OTT service possible.”

Rayburn goes on to state that this plan would go far in explaining why Amazon reportedly paid $500 million for Elemental, five times the company’s projected 2016 revenue. “A rather high valuation,” says Rayburn, “unless Amazon is also placing value on them for other reasons, like the ability to power their own live OTT service.”

Another possibility, he says, is that “Amazon is simply looking at the economics of the business, which would involve them talking with content owners about costs.”