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Amazon's new pay TV service in UK poses threat to Sky, BT and Virgin Media

Amazon Channels is set to launch in the UK following its success in the US

Jeremy Clarkson
Former Top Gear presenter Jeremy Clarkson is on Amazon's The Grand Tour

Amazon.com Inc. (NASDAQ:AMZN) is adding pay TV-channels to its Prime Video streaming service in the UK, threatening to disrupt traditional broadcasters such as Sky plc (LON:SKY), BT Group (LON:BT.A) and Virgin Media Inc. (NASDAQ:VMED).

The e-commerce giant has created a new venture called Amazon Channels, which will offer individual subscriptions to more than 40 channels without a fixed contract. T

The channels will be offered to Amazon Prime customers at an extra cost of between £1.49 and £9.99 for on-demand video or £79 a year.

The venture is an attempt to challenge satellite and cable companies such as Sky, BT and Virgin Media, which offer traditional bundles. Amazon also hopes that its new service will take market share from Netflix and Now TV, Sky’s streaming service.

Sky and BT, which share rights to all the major club football games, have declined to join Amazon Channels. Rather than allowing Amazon to become their distributor, they are seeking to attract subscribers to their own pay-TV packages.

Channel 4, UKTV and Channel 5 owner Viacom are also not involved in the venture.

A British broadcasting executive told The Telegraph that “the terms are rubbish so we walked away”.

“It could be good but they’re definitely trying to do it on the cheap,” the executive added.


ITV and Discovery join Amazon Channels...

ITV has been lured in by Amazon, however. A version of the ITV Hub catch-up service without advertising breaks will be available on Amazon Channels for £3.99 per month.

Discovery, which owns Eurosport and broadcasting rights to the Olympics, is also on Amazon’s books, as well as a number of niche channels, including Latin American and Bollywood films.

Alex Green, the former BT TV executive recruited by Amazon to lead its pay-TV venture in Europe, said he was confident of attracting more broadcasters once the service is available and drawing in paying customers.  

Green said the service “gives power back to customers to choose exactly what they want to watch".

Amazon Channels has already taken the US by storm after launching in late 2015, stealing consumers away from cable operators with more affordable pick-and-choose streaming options.  Green said the number of subscriptions in the US “had exceeded expectations” but the figure has not been disclosed.

The UK and Germany are the second markets for the venture.

Customers will have access to exclusive shows such as American Gods, The Grand Tour and Man in the High Castle. Amazon has invested heavily in The Grand Tour, car show fronted by the former Top Gear presenting team.

Shares in Amazon rose 0.13% to US$971.94 in afternoon trading, while ITV added 0.6p to 198.6p.

-- updates for share prices--

Quick facts: Amazon.com, Inc.

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Market: NASDAQ
Market Cap: $1.56 trillion

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