The acquisition will allow Amazon to provide media companies with on-premises, hybrid, and cloud-based solutions for Internet-based video delivery.
Amazon Web Services has agreed to acquire Elemental Technologies as it looks to boost its cloud-computing services.
The firm translates the code of original digital video content for over 700 customers across the media industry, which includes ESPN, HBO, British Broadcasting and Comcast, for web distribution.
Its technology can offer flexibility, scalability and performance required to deliver high quality video via turnkey, cloud-based and virtualised deployment models.
The deal size is about $500m, according to reports from The Information. Further details about the deal have not been disclosed.
Amazon plans to combine technology expertise from both the firms to deliver integrated solutions for the media and entertainment companies.
The solutions will economically boost video infrastructure which is in demand since the media industry has gradually coursed towards internet based delivery.
Amazon Web Services senior vice president Andy Jassy said: "Together, we’ll collaborate on deeper technology integrations and new infrastructure offerings so that media and entertainment companies can evolve their hybrid and cloud models as they continue to innovate their services for viewers."
Following the acquisition, which is expected to close by the end of the year, Elemental will continue its operations as a separate brand from Amazon Web Services.
Elemental CEO and co-founder Sam Blackman said: "The media and entertainment industry is at a unique inflection point, and as a part of Amazon, we will be in an even stronger position to help our customers delight their viewers globally.
"We’re thrilled to have Amazon supporting our growth and ongoing commitment to our customers’ success."
The acquisition is expected to close in the fourth quarter of 2015.