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Amazon Fires Up OTT TV Market

by David Mercer | 4月 02, 2014

As if there wasn’t enough choice in the expanding OTT TV market, Amazon has joined the fray with its $99 Fire TV digital media adaptor. Pitched as a faster, sleaker unit than its rivals, it puts Amazon squarely up against American internet heavyweight rivals Apple and Google, as well as specialists like Roku, in the race for viewers of tomorrow’s TV screen.

Amazon is certainly not new to the video market. It was a leader in the transition to internet-delivered DVDs and Blu-ray Discs and then in internet-delivered video downloads. Its Amazon Prime Instant Video and Lovefilm services have established the company as a leader in OTT video and, like Netflix, it is now commissioning its own original content. And while users could get Amazon’s services on other connected TV devices, Amazon didn’t have its own solution to the TV problem.

Fire TV solves that problem, as well as bringing games and, later, music to the TV screen. Amazon’s content portfolios and wide market presence will automatically make it a serious player for anyone looking for an alternative source of entertainment on their big screen. But like Apple TV and Chromecast, what Fire TV does not do is offer a serious threat to incumbent pay TV operators like Comcast and Sky, which still have most of the rights to premium live sports and first-run movies which OTT providers cannot offer. OTT TV customers are adding Chromecast, Apple TV and, now, Fire TV, to access additional content sources, including their own personal videos and web-sourced content, on their big screen, as much as to watch new content sources like Netflix.  There is little evidence so far that the so-called cord-cutting phenomenon is having a significant impact on pay TV providers, although they are clearly watching internet rivals closely and making their own plans for OTT. Sky’s Now TV is the best example of one such response and we expect pay TV/OTT partnerships to proliferate over the coming years.

One missing element appears to be social networking: still we have not seen a good example of integrating social networks like Twitter and Facebook into an OTT TV experience. Perhaps we will have to wait for Twitter and Facebook's TV adaptors to see that...

But Amazon appears to have done a good job of differentiating itself in what is already becoming a crowded market. It is right to have addressed the critical big screen user experience question, although we question whether voice control is necessarily the right approach – our research suggests modest customer support for this innovation. It is also right to focus on content discovery, a key challenge for all video providers. Innovations like multi-screen gaming will also help Fire TV to expand its appeal beyond video services.

All in all, a promising debut for a powerful new player in the OTT space and we look forward to the inevitable responses from its major rivals.

David Mercer

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