Amazon (AMZN) is making e-readers, tablets and will likely soon introduce a smartphone. As it works to build all types of connected devices, that leaves a natural next step: a television set-top box. The e-commerce giant is planning to introduce a device this fall dedicated to streaming video over the Internet and into its customers’ living rooms, according to three people familiar with the project who aren’t authorized to discuss it.
They say the box will plug into TVs and give users access to Amazon’s expanding video offerings. Those include its a la carte Video on Demand store, which features newer films and TV shows, and its Instant Video service, which is free for subscribers to the Amazon Prime two-day shipping package. The Amazon set-top box will compete with similar products like the Roku, Apple TV and the Boxee Cloud DVR, along with more versatile devices like the Playstation 3 and the Xbox. An Amazon spokesperson declined to comment.
Given Netflix's high-flying performance and positive press this week, the timing of this rumor's arrival is certainly not unintentional.
First things first, Amazon's on-demand video service is a fringe offering at best. It's integrated selectively with television and mobile devices, available most beneficially only to Prime members, and lacks some of its competitors' ambitious content partnerships. Simply put, Amazon's offering simply does not strike me as holding critical value or awareness.
Obviously, though, Amazon's invested in providing a window onto its storefront in whatever capacity possible. Furthermore, in the case of Amazon, they're not simply providing streaming, but also video purchasing. So, in an environment primarily characterized by devices like the Apple TV, Roku, and Xbox 360, I can certainly understand the lure of a hardware device wherein it can control end-to-end purchasing and the like.
Also, unlike Netflix, Amazon is selling an ecosystem. Thus, it is naturally precluded from the Apple TV and its interactions are difficult on a great many mobile devices. Accordingly, producing a proprietary product makes some sense.
Still, regardless of the inherent logic and rationale, I'm skeptical concerning the long-term viability and value of an Amazon-branded set-top box. Although Amazon is largely uninterested in margins and would, therefore, likely be fine with mediocre sales of its product, I cannot avoid the thought that such a device would be arriving at an extraordinarily transparent "me too!" moment.
Amazon's original programming is reportedly "terrible" and its media library is poorly differentiated from those of Apple, Microsoft, or virtually anyone else. On top of that, Roku — and others — already provide a robust window onto the Amazon ecosystem.
In releasing their own box, it'd be framed as a move against Apple, but I think the greatest victim would be Roku. Traditionally, Amazon has heavily promoted Roku — a smaller, more agile firm. Accordingly, Roku has become the de facto device for those wishing to interact with Amazon services. In this move, Amazon would sacrifice such a partnership, whilst ostensibly starting from scratch in the world of devices and media clout.
Of course, this would presumably allow Amazon to sell more media without any notable detractions. But is the business reasoning — "We might as well?" — sound? I'm skeptical.
So, as I say, perhaps the move makes sense in terms of gaining direct branding in the living room, but I fail to recognize the true differentiating potential and allure of such a device over its competition. Of course this is little more than unsubstantiated rumor at this stage. So, it'll be interesting to see what Amazon might provide should this product make it to market.
(Beyond "terrible" shows, that is.)