Amazon’s new Fire TV is a streaming video box that does games too.

APRIL 2, 2014 • By leveraging the technology and experience gained from its Kindle Fire tablets Amazon.com has marketed a $99 streaming set-top box called the Amazon Fire TV. The unit is already available for purchase online, and goes up against similar 1080p video internet delivery systems available from Roku, Inc. and Apple Inc. at the same price point. What the Fire TV delivers over its competitors is more powerful specifications that include a 1.7GHz quad-core Snapdragon 8064 processor, an Adreno 320 GPU, and 2GB of RAM in order to support game playing. The device uses the same Fire OS 3.0 Mojito installed on Kindle Fire HDX tablets, a heavily forked version of Android 4.2.2 KitKat. Fire TV also supports a second screen feature that can send video streams to Kindle Fires. Similarly, the feature is also supported in Fire TV games in a similar fashion to the Wii U controller. For example, in Sev Zero from Amazon Game Studios, one player can use the optional $39.99 Fire Game Controller for first person action, while a companion can use the tablet to manage resources and top-down weapon targeting. The controller also has a dedicated Amazon GameCenter button to access game progress, achievements and leaderboards. Consumers who buy the wireless controller also receive the $6.99 Sev Zero and 1,000 Amazon Coins (a $10 value). Amazon has partnered with 2K Games, Disney Interactive, Electronic Arts, Gameloft, Mojang, Sega, Telltale and Ubisoft to provide paid game content on the Fire TV. At launch, the average price per game was touted as $1.85. Games can be played with the standard Fire TV remote, or the Fire Game Controller. The latter also features media buttons to operate the Fire TV without the standard remote. Later, Amazon will release a Fire TV app for mobile devices that can also be used to control the system, or for game play. Although obtaining video content from Amazon’s own Prime service is encouraged, users also have access to Crackle, Hulu Plus, Netflix, SHOWTIME, YouTube, VEVO and Watch ESPN. Other content providers such as ABC, the Disney Channel, MLB TV, Twitch, and the WWE Network will be added later.

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Impact: For consumers in the market for an internet streaming box the Fire TV is a very good option. At $99 the unit is priced competitively and does offer substantially more features and performance than delivered by either Roku or Apple. AppleTV does have the advantage of linking into Apple’s wide content network for those who already have a major investment in iTunes, but the Fire TV has the benefit of running directly off of Amazon’s huge cloud server network, which should make for easy accessing of content off of the Prime service. Amazon could have easily emulated Google’s $35 Chromecast streaming plugin, but would have had to jettison game content to do so. Although the addition of games as a feature does set the Fire TV apart, we don’t believe games will make or break this system. The main focus of Fire TV is streaming video. Video is a much bigger application than games and much easier to do.  Excepting titles from its own studio, the type of games Amazon is looking at are more in the realm of tablet/mobile/casual products that are really no substitute for what the dedicated consoles provide. Still, Amazon has invested in a separate controller plus second screen tablet utility much like the Wii U, which means the company sees games as a serious commodity. Regardless, the Fire TV amounts to a rounding error in the game industry. But that could change if Amazon decides it wants to make a larger investment in the space.  However, the reality is you really have to very directly target gamers and to Amazon right now games are a secondary consideration.  So while gamers will still look to a dedicated console system, the Fire TV does show the difficulty the Xbox One and PlayStation 4 have in pushing their systems as streaming devices.  Fire TV seems to be a more compelling product for those mainly interested in streaming video.

Surprisingly, Amazon is not hyping online shopping on the Fire TV.

What does surprise us is that Amazon is playing down online shopping with the Fire TV. The company did not go into shopping options much. In an interview with the New York Times, the retailer acknowledged that Fire TV owners could shop for digital media, but that the decision was made to produce an entertainment product since Amazon found it difficult to differentiate shopping in the user experience. So far, Amazon’s template for digital hardware has been to offer high-end equipment at a low price knowing that the costs would be made up by online product sales. To us this suggests that Fire TV is more of a play to make Amazon Instant Video service, and Prime membership, relevant. At the end of March the retailer raised the annual subscription to Prime from $79 to $99. In addition to television and films, Prime subscribers get access to 40,000 digital books, plus free unlimited two-day shipping (and next day shipping for $3.99) on over 20 million products that Amazon sells or fulfills. For those customers who balked at the price hike, Fire TV sweetens the Prime value proposition significantly. Internet streaming boxes are still a niche segment, but with Amazon entering the competition in a big way a lot more consumers may take the plunge.