On the surface, of course, the $99 Amazon Fire TV may seem like, at most, an incremental improvement on what exists already (e.g. the $99 Apple TV). Sure, there’s great content from entertainment partners, voice search and the ability to play video games, but nothing obvious that would suggest that Fire TV is somehow the future of TV. It even looks a lot like the Apple TV. For now, the launch of Fire TV is more of a way to poach consumers away from companies such as Apple and give non-Amazon consumers one more reason to explore the entertainment options of Amazon’s ecosystem. Every dollar you might have spent with Apple you’d now be spending with Amazon.
But let’s think about the next iteration of Fire TV. By then, Amazon will have most likely figured out ways to embed e-commerce options into Fire TV. That would be big – it would mean that consumers would most likely be able to purchase products directly from their TV. Imagine watching the latest streaming content from Netflix or Showtime (two of the launch partners announced for Fire TV), and simultaneously being able to purchase clothing worn by one of the characters in a hit TV show, all without leaving your seat on the couch. Even better for Amazon chief executive Jeff Bezos, imagine watching original studio content produced by Amazon (e.g. “Alpha House”) and then purchasing items featured in those shows easily and conveniently from Amazon partners.
Unlike all the other tech companies out there trying to reinvent TV, Amazon is also the world’s largest e-commerce company that also happens to have an awful lot of data already about you. Fire TV arrives pre-registered to your Amazon account, and that means, at some point in the future, Amazon could make it a seamless process to go from watching entertainment content to buying things online. Amazon already knows what types of books you like, what types of films you prefer to watch – and when you like to watch them. There’s early buzz about the Amazon “ASAP” feature that enables Amazon to deliver video content to you even before you’ve ordered it, based only on its knowledge of your viewing habits. ASAP predicts what movies and TV episodes you’ll want to watch and buffers them for playback before you hit play.
Imagine what happens when Amazon adds an ASAP feature for other products, as well. That means that ad-supported model or subscription-based model for TV could one day become an e-commerce supported model. By launching Fire TV, Amazon has pieced together the next element of its entertainment ecosystem that makes possible a combination of all three business models. For Kindle Fire users, Amazon already has a subscription-based option for viewing video entertainment as well as an a la carte option. With Fire TV, it now has the makings of an ad-supported and e-commerce supported model.
It will be interesting to see the answering moves from the likes of Apple and Roku, both of which have popular streaming set-top boxes. It’s almost a no-brainer that Apple will introduce a voice search option in an upcoming version of Apple TV, and may attempt to replicate the Amazon ASAP buffering feature with some kind of “genius” option. Who knows? Maybe Apple will decide to launch endless patent wars against Amazon and Fire TV, the same way it has launched patent wars to stifle competition from Samsung in the smartphone market.
For all the talk of Internet TV going mainstream and all the stories about consumers watching TV on their mobile devices, it’s clear that the TV in the living room still has an important role to play in determining the competitive mix of the tech industry. You can’t argue with the numbers, which suggest that Americans still consume the overwhelming majority of their video content on their TV. Yet, there’s enough fragmentation in the way people watch TV that the Amazon set-top box may simplify the decision-making process for consumers willing to commit to a specific content ecosystem. With the launch of Fire TV, it’s clear that Amazon has figured out the new logic of the tech industry: the company that controls your TV wins.
Disclosure: Amazon chief executive Jeff Bezos owns The Washington Post.