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Fire TV Stick – An inspired move or has Amazon shot itself in the foot?

by David Watkins | Oct 31, 2014

Less than 6 months after the launch of its $99 streaming media box, the Fire TV, Amazon has decided to go head to head with Google’s Chromecast ($35) and Roku’s streaming stick ($50) by earlier this week launching its own HDMI media streaming dongle which will retail for $39 or can be had for just $19 for fast acting Amazon Prime customers.

Much like the Chromecast and the Roku streaming stick, Amazon’s device plugs straight into the TV’s HDMI port and facilitates the streaming of video from sources such as Netflix, HuluPlus, Watch ESPN and of course Amazon Instant. Like its rivals the Amazon Fire TV stick allows you to mirror your smartphone or tablet display on the TV screen although this functionality is only available to those owning a Fire phone or Fire Tablet or a Miracast-enabled device.

Amazon looks to have got one up on Chromecast in this fast growing market by not only providing better hardware specs than its streaming stick rivals (including 1GB RAM, 8GB storage and dual band Wi-Fi )but also by including a dedicated remote control in the box. Amazon claims that users do not want to be restricted to using a mobile device such as a smartphone or tablet to control their viewing experience and by giving consumers giving the option of a dedicated remote (without impacting significantly on the cost of the device) may give Amazon the edge over its rivals from a hardware perspective at least.  It must be noted however that the Bluetooth remote that is supplied with the stick does not include voice control. The voice controlled version can be purchased for an extra $30.

On the one hand, the launch of a streaming stick is a smart move from Amazon as the low cost of the device will mean that Amazon can build a sizeable base of Fire TV devices at a much faster rate than if it were to rely solely on the more expensive Fire TV box. The more Fire TV devices that are out there, the more potential it has to attract content partners and subsequently sell more Fire TV devices.  The timing of the Fire TV stick launch is also significant as it will allow Amazon to capitalise on the holiday shopping season and at $19 or even $39 the device is an ideal stocking filler.

On the other hand, while the Amazon Fire TV Stick will appeal to Amazon’s Prime customers (especially so at $19), this is exactly the same audience that Amazon has been targeting with its more expensive Fire TV box. So does Amazon run the risk of cannibalizing sales of its own product?

Low cost digital media streaming sticks are all the rage at the moment and are proving hugely popular with consumers who want quick and easy access to their favourite OTT video services. While certainly less powerful and not as feature rich as their set-top cousins, streaming sticks remove the need for another box and are also the ultimate travel device for catching up on shows on your hotel room’s TV.

Roku, Google and now Amazon have all decided on a two pronged hardware approach to the OTT TV streaming market in an attempt to appeal to as wide a base of users as possible. Each runs the risk of cannibalizing its own sales but each sees the necessity of building as large a base of users as possible in order to attract more content partnerships and in the case of Amazon and Google, drive more consumers to their respective content stores and services. In this writer’s opinion, Roku arguably has the most to fear from Amazon’s latest product announcement not only because yet another technology heavyweight has stepped into its core market but also because the increased competition could present problems for its rumoured IPO. Meanwhile, as Apple continues to ponder its next move in the TV space, Google and Amazon will make hay and steadily gnaw away at Apple and Roku’s leadership position as they look to strengthen the loyalty of their existing fan base and entice new users into their respective ecosystems.

 

Strategy Analytics’ Connected Home Devices service provides ongoing analysis and insight on developments within the market for TV-centric OTT devices including a quarterly vendor share tracker for Smart TVs, Smart Blu-ray players, IP-enabled Games Consoles and Digital Media Streamers such as Apple TV, Roku etc.

 David Watkins

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