TV streaming: Inside Amazon's new digital development centre

"I'd have to kill you if you go in there," quips Paula Byrne, the Liverpudlian boss of Amazon's new digital development centre in east London. But she isn't entirely joking as she points out the locked area, with blinds closed, on one floor of the largely open-plan, eight-storey building.

This is the United States online giant's global research and development hub for all its TV operations. That includes movie-streaming service LoveFilm, which it bought last year for an estimated £200m, and PushButton, a London interactive TV app developer, which Ms Byrne set up before Amazon bought it.

There is good reason why Amazon, once just known for selling physical books and then e-books and more general merchandising, is investing so much in TV streaming over the internet. The world of entertainment is moving from physical to digital.

Not long ago, there were CDs and DVDs wrapped up around the Christmas tree. Now, millions of people will be receiving Amazon Kindle devices, tablets and other connected devices such as smart TVs. Within minutes, they will be downloading films, TV shows and other content, some of which will be from Amazon's Kindle store and its LoveFilm website and apps.

Amazon.co.uk says it has seen purchases on Christmas Day increase by 263 per cent over the past five years and, not surprisingly, it expects this year to be even bigger.

If it's anything involving Amazon and TV, the chances are that Ms Byrne and her team will have had a hand in developing it. New features on Amazon's US film-streaming service, Amazon Instant Video, are being developed here, for example.

London, not Silicon Valley, is now the global R&D hub for Amazon's TV operation, in this unassuming modern building near Old Street roundabout, the area beloved by start-ups that has been variously dubbed Silicon Roundabout and Tech City.

What's more, as sales of tablets and smart TVs soar, Amazon is looking to London, with its heritage in TV as well as digital skills, to be a hot-bed of ideas and features, such as "red-button" technology on the TV remote control.

"What's happening now is screens are coming together," says Ms Byrne, explaining how tablets, phones, laptops and TVs are becoming more inter-connected. "The UK was really a world leader in terms of making the TV much more of a two-way conversation rather than 'here we are, this is what you're going to be watching tonight'." As she gives The Independent a tour, it feels like a big start-up. Lots of casually dressed people, mainly blokes, in their twenties and early thirties are sat at computers.

The staff are a mix of software engineers, designers and "user interface" experts. One or two are tapping away on laptops on bean bags with big London illustrations from the Big Hug Company (Mayor Boris Johnson was apparently a fan when he came to visit). Electronic music plays not too loudly through speakers.

"In many organisations, engineers are at the bottom of the pile. What Amazon's really good at is empowering engineers," she says. "When you do create a nice environment, you can instantly measure how effective it is in terms of people enjoying coming into the office."

In some rooms, there are long rows of TV sets, as many as seven in a row, from different manufacturers. There are game consoles too, as that's a growing way to watch interactive TV. One of the key jobs of the Amazon centre is to road-test new technology from all manufacturers. There are a few signs that this a wealthy multinational: the lift has fancy tongue-and-groove wood panelling and there's a roof terrace with a giant chess set. Amazon has come under fire over offshore tax avoidance – most of its operations are based in Luxembourg – but the London office is an example of how it is making investment locally. Amazon created 100 jobs when it opened the centre in July and is "continuing to hire". There were existing staff too.

Ms Byrne will only say "hundreds" now work in the building. When asked about what precisely the developers are working on, she is again a little vague. The key, she says, is giving the consumer control over content and making it available as fast as possible. "The cleverness is how we piece it all together."

How about being able to combine viewing data with other shopping habits and "cross-sell"? That's outside her remit. The focus is on just TV.

Ms Byrne explains why she can't say more or show us inside that locked room. "We're working with competitive manufacturers. Even within the teams here, there are things that are top secret. It's next-generation stuff." It could well be next year's Christmas presents.