In a bid to steal a march on Apple, the set-top box will allows users to download apps right from launch, it is believed.
Amazon’s set top TV box will be called FireTube, and will be on sale in time for Christmas, it has been claimed.
The gadget is is expected to sell for under £100, and will require a subscription to Amazon Prime.
Cinnamon on the big screen
It will take advantage of content from Lovefilm in the UK and Amazon’s Instant Video service in the US, and the firm has already approached app developers about the project, according to the Wall Street Journal.
Amazon has also increasingly been producing its own TV shows and films, which are expected to be offered through the device.
Earlier this month it applied to trademark the name Firetube in the US and Canada.
The gadget, code-name "Cinnamon," could be a pre-emptive strike against Apple, which is expected to reveal its plans for the TV market next year. It will also take on the £99 Apple TV already on sale.
It will also go up against Chromecast, Google’s £22 TV dongle that was announced in the US earlier this year. Google is believed to be in talks with UK broadcasters about adding their apps to the service before it officially launches outside the US.
Roku, which sell boxes that stream content provided by the likes of Netflix to living rooms, and is behind Sky's TV box, is also in Amazon's firing line, as are so-called "smart" or Internet-connected TVs made by Samsung and LG Electronics.
Amazon is also believed to be in talks with US cable firms over the project, which raises the prospect of it showing live TV broadcasts as well as other TV providers being given access to Amazon's exclusive shows.
Amazon is also believed to be working on two smartphones - one cheaper model that may launch this year, and a more expensive device with a 3-D-type user interface that won't be released until next year, according to insiders familiar with the plans.
[Source: Wall Street Journal]