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Tuesday, April 25, 2006 - Page updated at 01:49 PM

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Amazon offers on-demand DVD manufacturing service

Seattle Times retail reporter

For those obsessed with the Westminster Kennel Club Dog Show, the PBS mainstay "Nova" or Matt Lauer, Amazon has something for you.

The online retailer Monday began offering a service that allows film studios and TV networks to sell more obscure or niche titles through an on-demand DVD manufacturing service.

The Media Gateway program — developed by Amazon subsidiary CustomFlix Labs — encodes films and TV shows in a digital format and archives the content.

When a customer orders a film or show on Amazon, the online retailer manufactures the DVD and ships it to the customer. While film studios and TV networks already sell their most popular titles online, the service erases the financial risk associated with manufacturing DVDs and holding inventory for lesser-known works.

"It knocks down all those barriers and concerns," said Greg Greley, vice president of Amazon's worldwide media products.

CustomFlix Labs has signed agreements to provide the DVD-on-demand service for NBC Universal, A&E Home Video and PBS.

A&E Home Video, the home-entertainment distribution arm of A&E Television Networks, is offering more than 1,000 titles through the service, including the "Biography" series and "Modern Marvels."

NBC plans to offer shows such as the Westminster dog show and a compilation of "Where in the World is Matt Lauer?" segments from the Today show. PBS titles include "Antiques Roadshow," "Frontline" and "Nova."

The technology underlying the service also will allow film studios and TV networks to sell content in other digital formats in the future.

Amazon said it's up to film studios and TV networks to decide what they want to sell online. "We're letting the content provider decide how deep they want to go with their selection," Greley said.

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Amazon has invested a significant amount of time and money on technology and content in recent years — and said it would add more computer scientists and software engineers, despite falling profits.

The company last year invested $451 million in technology and content, a 59.4 percent increase in spending from the year before. Its annual profit, meanwhile, fell 38.9 percent to $359 million.

Amazon Chief Executive Jeff Bezos defended the company's strategy in the annual letter to shareholders, filed last week with the Securities and Exchange Commission.

Bezos said not all the company's important decisions can be made in a math-based way. And though it uses data, analysis and math to craft strategy, sometimes "the prime ingredient in these decisions is judgment."

"Any institution unwilling to endure controversy must limit itself to decisions of the first type," he wrote of math-based decisions. "In our view, doing so would not only limit controversy ... it would also significantly limit innovation and long-term value creation."

Amazon's shares closed Monday at $35.79, down 24 cents. The company announces its second-quarter financial results today.

Monica Soto Ouchi: 206-515-5632 or msoto@seattletimes.com

Copyright © 2006 The Seattle Times Company

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