Amazon TV – Better not bigger

Fire TV makes its ecosystem richer not bigger.

• Amazon has taken the first of two plunges into the consumer ecosystem that I am expecting this year with the launch of Fire TV.
• I am expecting a handset or handsets to be launched towards the end of the year in time for the Q4 selling season.
• The Fire TV set top box is very similar to Apple TV, Roku, Chromecast and so on with two exceptions.
  • First. It is also a good games machine.
  • Second. It will be the only place to get exclusive Amazon TV shows and games.
• The device is coming at $99 but the user needs to pay out another $40 for the game controller in order to make the most of the device.
• Amazon’s exclusive content is front and centre of this device with other providers like Netflix and Hulu as “also included” on the device.
• Services such as HBO Go and Spotify are completely missing.
• While the video streaming is good with latency almost completely irradiated, it is the games that differentiate this product.
• Amazon has its own game studio which combined with the Android ecosystem provides a pretty good range of games at launch.
• These are not XBox or PlayStation quality games but more like the kind of game one would buy in on a tablet for $5-$10.
• Even so, the games are still quite large as one reviewer managed to fill the tiny 5.5GB of storage space by installing just 12 games.
• It is the Wii U that will suffer as a result of this product as it is the casual gamer and the Amazon Prime customers that Amazon is going after with this product.
• In many ways this product is just like the Kindle Fire in that it will only really come to life when the user has an Amazon Prime subscription.
• This subscription adds another $99 per year to the cost of this device and it is this that ensures that the user base will remain very small.
• What Amazon needs to do is to separate its free 2 day shipping from its ecosystem and thereby meaningfully lower the cost to the user.
• Its ecosystem competitors such as Google and Apple do not charge the user an annual fee for access to their services putting Amazon at an immediate disadvantage.
• What is needed is a tiered approach where some basic functionality is provided for free which can then by upgraded with what the user wants.
• This is what will be needed to make its phones a success.
• Otherwise, an Amazon phone will simply be yet another Android device but worse it will have no access to Google Play.
• I am almost certain that only those with an existing Amazon Prime subscription will buy Fire TV and therefore I do not see it making the ecosystem larger.
• However it will enrich the experience Amazon Prime subscribers by making it easy to access the content on a device best suited for it.
• Very much like tablets, Fire TV makes the ecosystem richer, it does not make it bigger.
• With around 20m subscribers, the Amazon ecosystem remains an irrelevance when compared to Google and Apple and I see nothing here to change that state of affairs.