Commentary

Amazon Is Thinking Inside The Box

Amazon’s quest for brand ubiquity will next take it into the rooms where consumers’ ginormous screens reside, if reports initiated by Bloomberg’s Brad Stone yesterday prove correct. The set-top box would connect to TVs, just like similar devices from the likes of Apple, Roku and gaming consoles such as Microsoft’s Xbox, and will feature the streaming content that Amazon, like Netflix, Hulu, Google and others are racing to both buy and initiate, inside sources tell him.

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“It would certainly make some sense,” Jason Krikorian, a general partner at venture-capital firm DCM, tells Stone, although he has no direct knowledge of Amazon’s plans. “They have a ton of content, an existing billing relationship with millions of users.” He also points to its “reputation for solid hardware products and a terrific channel through which to promote the product.” 

The box reportedly is being developed by Amazon’s Lab126 division under the direction of Cisco Systems and Apple veteran Malachy Moynihan.

CNET’s John P. Falcone asks “Seven Questions about Amazon’s Mystery Streaming Box,” including whether it will have an app store with non-Amazon content, whether it will have music and games, and what will differentiate it from Roku boxes, which “already offer the Amazon video and Cloud Player audio apps.” Then, of course, there’s the $50 question: “What will it cost”?

The Wall Street Journal’s Greg Bensinger talked with Oppenheimer & Co. analyst Jason Helfstein, who “noted that Amazon sells its gadgets at closer to their cost of production, preferring to make a profit on the content. That means a possible set-top box could be offered for less than competing devices such as those from Roku, which are available for as low as $50.”

Webush Securities analyst Michael Pachter believes “plenty of consumers would buy an Amazon streaming video box for $100, roughly what Apple charges for Apple TV, if it included unlimited streaming for a year,” according to CNET’s Jay Greene. “Amazon could then offer a second year of Amazon Prime for, say, $4 a month, a discount from the $79 a year it currently charges, in the hopes of retaining those customers.” 

Says Pachter: “That means that Amazon can sell millions of boxes, make millions in profit, provide streaming to millions of additional customers, and have a chance to upsell them Prime. Makes sense to me.”

But not to everyone, apparently.

“Amazon Is Building A Streaming TV Box You Don't Need,” reads the hed over a piece by Rebecca Greenfield on the Atlantic Wire. What’s so different about it besides its “Amazon-centric focus?” she asks. Aye, that’s the rub of course. 

“Amazon probably doesn't care if its new box revolutionizes much of anything in terms of hardware,” Greenfield concludes. “It just wants another way to get people addicted to its stuff-buying empire. And a shiny new gadget, ready just in time for its holiday push, would seem to do just that.”

Wired’s Roberto Baldwin offers his own advice about what “Kindle TV,” as several commentators are speculating that it will be called when it comes to market, should “cram into” itself. Among his suggestions are that, like the Kindle Fire tablet line, it should stream other services such as Hulu and Netflix. “It needs to be surrounded by a smooth, intuitive UI,” he writes, that has “integration with pay-TV services from cable and satellite operators.”

Meanwhile, All Things D’s Peter Kafka has the skinny on Netflix guru Reed Hastings’ 11-page essay on Scribd about the future of streaming media that leads off with a quote from “House of Cards” scheming lead character, Francis Underwood, to “look at the bigger picture” -– something that Hastings has presumably been doing all along, we surmise. (His musings come “fresh off a triumphant earnings report,” Kafka points out, following a reflective period in the desert that we covered Tuesday.)

“Over the coming decades and across the world, Internet TV will replace linear TV,” Hastings’ own summary states. “Apps will replace channels, remote controls will disappear and screens will proliferate.”

There is one “new nugget”: a prediction --albeit “one held by many other people” -- that “we’re moving to a world where ‘apps replace channels.’ Hastings … makes it clear that he sees Netflix first and foremost as an app provider.”

There will be multiples winners, as Kafka’s headline tells us, including HBO, ESPN, the Cable Guys and, of course, Netflix itself. There’s not a lot of news in the document, he writes, although Hastings’ worldview makes it “well worth the read.”

The “Today Show” and its host, Matt Lauer, are not among those explicitly predicted to be in the winner’s circle but, thanks to The New York Times’ Brian Stelter, you could have seen that coming.

2 comments about "Amazon Is Thinking Inside The Box".
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  1. Joe Q Bretz from One Pass Media, April 25, 2013 at 3:57 p.m.

    More options and more content! We are of course excited to be able to take our ever growing library of content and original programming to the masses. I am personally excited to see what will come of this new strategy by Amazon!

    Joe Q. Bretz
    President
    The Digital Development Group, Corp.
    www.digidev.tv
    www.digidev.com
    otcbb(DIDG)

  2. Anne Peterson from Idaho Public Televsion, April 25, 2013 at 8:36 p.m.

    Again, the devil is in the downloading detail -- too many interruptions in my own DSL universe and my online rental didn't make it to my screen but my rental did.

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