The competition for your living room is getting a whole lot hotter. Amazon (NASDAQ: AMZN) is reportedly planning to take on dynamos Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG) as well as upstarts such as Roku by entering the television set-top box business this fall.
Those companies and others engaged in the content-delivery business are locked in a blood sport to see who can capture your attention and win your undying loyalty. Who’s going to emerge victorious? With a plethora of world-class companies pitted against one another, it will likely be the entity that can grab the greatest degree of loyalty from consumers.
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This is why Amazon could wind up with an advantage. Its service record is unparalleled. The public loves-loves-loves Amazon’s breakthrough, the Kindle, which has become identified with the e-book rage and revolutionized the way we read books and periodicals in the 21st century. Amazon has earned that loyalty over the years through its e-commerce presence and constant improvements.
So, why does Amazon now feel a need to vie for domination in the set-top market – to extend its Kindle with a “Kindle TV”?
Casey Newton at The Verge put it best when he described Amazon’s audacious decision to crash the party in your living room this way: “The simplest explanation for Amazon's entry into the set-top box space is that the company has to.”
Amazon just can’t ignore or overlook a market that has so much potential for sheer sales volume, not to mention the cross-marketing opportunities offered by those blessed Kindle devices.
Does it matter that this market appears to be out of Amazon’s comfort zone? Not one bit.
Remember that Apple (NASDAQ: AAPL), an innovator best known for phones, tablets and computers, sold 5 million Apple TV boxes last year. Google, not wanting to be left behind, already has lined up a combination of television instruments and hardware partners, though none has really stood out from the pack. Nintendo, Microsoft (NASDAQ: MSFT) and Sony (NYSE: SNE) have their video gaming consoles. Consumers – and Wall Street – are anxiously waiting for Microsoft and Sony to roll out their new models later this year, but both of those boxes will be capable of doing far more than play video games.
Perhaps the clearest indication that Amazon had to enter the set-top sweepstakes could be found in the fact that upstart Roku sold 5 million units since it unveiled its first streaming box five years ago. Earlier this year, I asked the CEO of a powerful television company if he was afraid of the threat symbolized by Roku. He surprised me by saying: “Roku? I never think of it.”
He might be singing a different tune by now, though. Roku has become the second-most popular streaming-video box, following Apple TV, by assuming a much more modest strategy. Roku’s $99 Roku 3 model, which has received bullish write-ups, boasts 750 channels.
And don’t discount Netflix (NASDAQ: NFLX), even though that formidable streaming company has yet to come up with its own hardware.
So, today, new competitors come from all angles and Amazon has to stake out its own turf. Amazon’s video offerings have come a long way from the days of the “Unbox” service. Amazon’s Instant Video now offers more than 140,000 titles that you can either rent or buy, encompassing new movies and TV episodes. If you subscribe to the $79-a-year Amazon Prime service, you can check out thousands of TV programs and films at no extra charge.
Even without its own set-top offering, Amazon already has a large role in the fight for living rooms. “Many other set-top devices already give their users access to Amazon’s video catalog,” Bloomberg BusinessWeek noted. “By building its own system, Amazon can put content more directly in front of consumers while expanding its lineup of devices and giving developers another reason to create apps for Amazon’s digital ecosystem.”
That word – ecosystem – has become key to understanding the evolving tech and media worlds. Each major player, from Apple to Google to Amazon, wants to lock users in to its particular devices and corresponding content marketplaces.
Amazon already has a robust ecosystem in the making, with a commanding online retail presence, the Kindle tablet platform, an expanding video service and legions of loyal customers. It even is rumored to have a smartphone of its own in the works. “The living room,” as The Verge noted, “is the missing piece.”
But not, it seems, for long. Amazon is ready to crash the party.
