It’s Amazon vs. Apple, according to the latest reports, with Netflix in the middle

Tuesday was busy day as two of the biggest names in online retail — Apple AAPL and Amazon AMZN — jockeyed for position in the fast-evolving market for Internet-based television.

Both have been actively courting the major studios, including NBC Universal GE , Time Warner TWX , News Corp. NWS and Viacom VIA-B , each for a different reason. Apple has been trying to line up permission to offer 99-cent TV rentals on iTunes. Amazon is apparently trying to build a new subscription service.

Wall Street Journal
reported Tuesday morning that Amazon was negotiating with the big studios for subscription service similar to the one offered by Netflix NFLX . In a addition to its DVD mail-order subscription service, Netflix allows customers to stream selected movies and TV shows directly to their computers.

But Apple, which had all-but given up its dreams of building a similar subscription service, may have a surprise up its sleeve: Netflix itself.  According to a report posted Tuesday evening on
Bloomberg Businessweek
, Apple is ready to announce a new set-top box Wednesday that will include, for Netflix subscribers, access to their “Watch Instantly” library.

Netflix, which already has apps on the iPad, iPhone and iPod touch, has been spending heavily to beef up its video library. It signed a five-year $900 million deal with three Hollywood studios — Paramount, Lions Gate and MGM — for the online rights to more than 3,000 titles.

[Follow Philip Elmer-DeWitt on Twitter @philiped]