By Alistair Barr

SAN FRANCISCO (Reuters) - Amazon.com Inc is producing its own movies and TV programming using the consumer tracking and data crunching skills it developed while becoming the world's largest Internet retailer.

Essentially, Amazon is crowdsourcing the creation of original content -- movies such as "Zombies versus Gladiators" and the children's TV series "Magic Monkey Billionaire."

The retailer hopes the approach will result in more hits and fewer flops than the traditional Hollywood practice of filtering creative ideas through three-martini lunches with studio bosses and movie stars.

Like rival movie provider Netflix Inc, Amazon is developing its own content to supplement movies and TV shows from Hollywood's back catalog. Amazon pays an estimated $1 billion a year to stream programming from others over its Prime Instant Video service.

Since late 2010, the company's Hollywood studio, Amazon Studios, has let aspiring screenwriters and film makers upload thousands of scripts to its website.

It has an exclusive, 45-day option to buy movie scripts for $200,000 and TV series for $55,000. It can also pay $10,000 to extend options for 18 months.

Instead of green-lighting a feature-length film or TV pilot, Amazon first helps develop the scripts it options into trial videos. It posts these online to solicit reviews and feedback from its millions of customers. Writers use the feedback to adjust scripts, hoping to boost the chances of creating a hit when Amazon spends millions of dollars turning projects into full movies or TV shows.

"Hopefully we can avoid big bombs," said Roy Price, head of Amazon Studios. "Our notion for what the world needs may be a roller-skating movie or a battleship film, but that could be wrong. We can do tests and find out that, actually, no one cares about this project or that one. If you do that before you spend $200 million on it, that would be good. Good for customers and good for the business."

For instance, Amazon took its nine best test movies from 2011 and posted them on Amazon Instant Video, the company's streaming video service. Customers viewed the projects hundreds of thousands of times, according to the company. It is using reviews and feedback to re-write scripts.

Amazon also collected data on how long customers watched the test videos and how many watched all the way through.

"That form of implicit feedback is as useful, or more useful sometimes, than the explicit feedback," Price said. "This told us something about the marketability of these ideas."

Amazon Studios recently turned "Blackburn Burrow," a movie script by screenwriter Jay Levy, into a digital comic to get more consumer input.

The comic, recently the most-downloaded free comic on Amazon's Kindle store, comes with a survey for feedback on what people thought about the story, according to Levy.

"If you look at the amount of data Amazon collects every day, it's incredible," Levy said. "This way, they begin to get actual feedback about the story and will create something that people really get invested in."

Bringing market research to the creative process is nothing new, of course. Hollywood tests movies with focus groups all the time. But it is not done on such an open, large scale as Amazon's approach.

"You often don't get audience feedback until you almost release a movie," said Edward Saxon, Oscar-winning producer of "The Silence of the Lambs."

"Film-making is an iterative process - a draft and then another draft. Amazon is very smart to find more places along the way to get feedback."

Saxon is one of a handful of big-name producers who have signed on to Amazon Studio projects. He is helping develop "Children Of Others," about a woman who takes her last chance at a fertility clinic, only to find that her unborn child may be the first wave of an alien invasion.

Amazon Studios currently has 21 movie projects and nine TV projects in development.

The movies will be made for theatrical release - Amazon has a deal that gives Warner Bros. Pictures the first crack at bringing them to the big screen, known in industry parlance as a "first-look" deal. Any TV series will be distributed on Amazon's video streaming platform as exclusive shows, according to Price.

Amazon has been clear about what it wants to spend and it knows movie-making costs money, Saxon said.

"I am betting my professional energy that we are going to see a good number of Amazon movies, and I hope mine is one of them," he added. "The movie we're making is going to compete with the big boys."

(Reporting By Alistair Barr; Editing by Peter Lauria and David Gregorio)

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