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Amazon Thinks Inside TiVo's Box

Unbox users will soon be able to rent and purchase movies and television shows for less than Wal-Mart's recently launched service.

Amazon's Unbox video download service is getting a box of its very own.

The pioneering e-tailer said on Wednesday that Unbox users will soon be able to rent and purchase movies and television shows through TiVo digital video recorders.

The available titles come from major film studios and TV networks -- CBS, Fox Entertainment Group, Lionsgate, Paramount Pictures, Universal Studios Home Entertainment, and Warner Bros. Entertainment -- rather than, say, two guys with a video camera and more diet cola than they know what to do with.

The new service is being beta tested among a select group of TiVo subscribers. Amazon expects it will be available to some 1.5 million broadband-ready TiVo boxes "soon."

One-and-a-half million is probably a lot more than the current number of boxless Unbox subscribers who download movies onto Windows PCs -- Amazon's refusal to disclose its Unbox customer base suggests that the number isn't worth crowing about.

Once the new service becomes available, Amazon customers can establish a link between their Amazon accounts and their TiVo hardware through the Amazon Web site. Once that's done, downloaded movies will appear in TiVo's Now Playing menu.

Television shows will sell for $1.99, and most movies will sell for between $9.99 and $14.99. Movie rentals start at $1.99. This is comparable to the pricing at Apple's iTunes Store and lower than the $12.88 to $19.88 range of the video download service that Wal-Mart introduced on Tuesday.

Apple will soon begin shipping its own video box, Apple TV, but Cynthia Brumfield, president of media research consultancy Emerging Media Dynamics, contends Amazon's move has more significance for Microsoft than Apple.

"If anything, the rivalry will be between Amazon and Microsoft," says Brumfield. "iTunes isn't really aimed at the TV set, although given this development, Apple is bound to step up the promotion of its Apple TV device as a way of bringing iTunes video to the TV set."

Microsoft's horse in this race is the Xbox 360, and Microsoft, like Amazon, is eager to establish itself as the leading distributor of top-tier digital content. Both companies have a ways to go: Apple currently holds about 76% of the video download market, according to Brumfield.

Amazon's deal with TiVo may further flummox cable and phone companies, which increasingly find themselves in the position of providing the broadband pipes that Internet competitors use to threaten their content business.

"The real question is what broadband providers will do about all these services that bypass their traditional role as providers of TV services," says Brumfield. "Both Amazon Unbox on TiVo and Microsoft's Xbox 360 rely on cable modem and DSL services to deliver their video options. So not only will cable operators and phone companies be faced with increased competition -- to some degree -- they'll also be the conduits for delivering those services."

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