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Amazon Keeps 'Em Guessing

When it comes to movie services, Amazon (Nasdaq: AMZN  ) is becoming the financial world's equivalent of Brad and Angelina -- are they or aren't they? (It's lately become quite clear, of course, that Brad and Angelina are.) In Amazon's case, the question as it relates to video is: Will it or won't it?

Yes, the rumors keep flying that Amazon's going to do something pretty hip with video (I've noted such rumors before), and yet another rumor splashed across the Internet late last week in regard to ongoing negotiations with movie studios.

Amazon is apparently in talks with Viacom's Paramount Pictures, General Electric's (NYSE: GE  ) Universal Studios, and TimeWarner's (NYSE: TWX  ) Warner Brothers. The service reportedly being contemplated would let customers pay a fee to download movies and TV shows, as well as burn them onto blank DVDs. The blank-DVD part is a new twist; past rumors about Amazon's plans included allowing users to stream movies while waiting for physical DVDs to arrive through the mail. A Wall Street Journal article also poses the interesting idea that the movie downloads could be available simultaneously with DVD release.

Amazon is one of the most interesting contenders in the race for digital dominance, but unfortunately it seems that its clever ideas have fallen on deaf ears lately. However, Amazon's Digital Locker -- an element I have found interesting in the past -- could just as easily serve as a repository for other kinds of digital content as it could for customers' digital-movie purchases.

This all bears a striking resemblance to Apple's (Nasdaq: AAPL  ) iTunes. It seems clear that Amazon wants to beat Apple to the punch on movies, despite the fact that when it comes to music and TV shows, Amazon is a day late and a dollar short -- although apparently, it has plans to try to catch up, and then some.

Many of the articles about the movie rumors are also pointing out that discounters like Wal-Mart (NYSE: WMT  ) may feel the hurt from this Amazonian service, although those retailers are ostensibly looking to offer similar digital products. Google (Nasdaq: GOOG  ) , meanwhile, is already trying to tap in to digital video. And I can't help wondering what an Amazon service like this one might do to Netflix (Nasdaq: NFLX  ) , which is still relying on people's disenchantment with bricks-and-mortar video rentals. A cheap and easy service from Amazon could make Netflix's now-convenient snail mail service look slow by comparison.

Some of the buzz around the Internet makes Amazon's attempts sound like an inevitability, but it's not a done deal yet. These negotiations won't be an easy task. However, if Amazon can pull this off, it will help the company play catch-up in the digital-content wars, an area where Amazon should excel. And excelling is something that Amazon investors really want to see., Time Warner, and Netflix areMotley Fool Stock Advisorselections. To find out recent stock recommendations from David and Tom Gardner, try Stock Advisor free for 30 days.

Alyce Lomax does not own shares of any of the companies mentioned.

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