Why Amazon wants to rule your television

Amazon is stepping up its presence in the TV and video streaming space to compete with Apple TV and Google Chromecast. The Post's Hayley Tsukayama explains what you need to know about the new device and how the change might affect you. (Jhaan Elker and Kate M. Tobey/The Washington Post)

 

Where's the next major battleground for technology companies? For all the talk of drones, wearables, homes of the future and flying Internet networks, the truth is that tech companies are still keenly interested in the consumer electronics device that's been a fixture in the American living room for decades: the television.

Amazon.com is holding a major media event Wednesday to talk about the future of their video business, which is widely expected to be the moment where it becomes one of an increasingly crowded group of firms who want to control your time on the couch. Speculation has been flying for years that Amazon will release a streaming video device -- similar to Apple's Apple TV or Google's Chromecast -- that brings online video content, and potentially Android-based games, to the largest screen in your house.

Why? Despite what you may think, the TV is still where people turn for the bulk of their screen time, and Amazon wants to be a main portal for all of your entertainment. (Amazon.com chief executive Jeffrey Bezos is the owner of The Washington Post.)

According to the data from the Nielsen published in February, Americans still spend an average of 185 hours per month with their televisions, as opposed to 34 hours and 21 minutes with their smartphones. And while mobile use is on a steady rise -- up an average of six hours from the same time last year -- much of that time is spent accessing entertainment, with Americans reporting 15 percent of all their mobile time is devoted to that exact purpose.

And as the media landscape becomes more fractured thanks to viewers picking up content on streaming sites, cable, broadcast channels, video-on-demand services and more, offering something that make it easy and comfortable to watch all that video via one service is more appealing than ever, analysts say. Right now, consumers are constantly sifting through multiple services' catalogs -- a frustrating experience when all you want to do is satisfy a movie craving.

"It's gotten worse," said Dan Rayburn, principal analyst at Frost & Sullivan and executive vice president of StreamingMedia.com. "There are more guys with more devices. As more services come out, and they're not all through one portal, you have to go directly to all of these things. That's part of the problem with fragmentation as more of these devices come to the market."

For Amazon, which has already been pushing its video service and original studio content such as "Alpha House" to mobile and online viewers, it's almost a no-brainer to try and grab a piece of that larger pie.

It's an easy prospect for them, Rayburn said. "They have the marketing power and ability to push it hard," he said, adding that Amazon is also no stranger to pushing cheap hardware in order to sell more content -- that's been the firm's successful strategy with its Kindle line of e-readers and tablets for years.

Other firms such as Roku, Rayburn noted, are already able to sell their streaming video devices for $50 or less. For Amazon, which could work at a much larger scale, the costs would be nearly negligible.

"What is the cost to Amazon for a box like that?" Rayburn said. "They could afford to eat $20 bucks [per device] to get more Prime members."

And the potential for upside could be enormous. Those who own the Amazon Kindle, for example, spend over $400 more at Amazon than those who don't, according to a study from Consumer Intelligence Research Partners. The same firm has also estimated that Prime members spend twice as much as non-Prime members. A streaming video gadget could produce the same kind of boost for Amazon, particularly if the firm offers a deal for Prime membership with purchase, as it has for the Kindle Fire.

And while the space is crowded, Amazon doesn't face particularly stiff competition in this space right now, Rayburn said. Roku is the market leader in the set-top box space, but may have trouble competing with Amazon's sheer scale, he said. It's followed by Apple's "hobby" product, the Apple TV, which has never taken off outside of the firm's most devoted fans. Google, which tried and largely failed to get a foothold in the smart television space a couple of years ago, finally hit on a solution last year with the $35 Chromecast, but still doesn't have the content breadth to compete with either.

To see early success, Rayburn said, Amazon must beat Apple on price and chip away at Roku's market share --  something it certainly has shown in the past it has the patience to do.

Hayley Tsukayama covers consumer technology for The Washington Post.
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