Amazon Launches Fire TV As It Pushes Sales Of Digital Content

Apr 8 2014, 7:50am CDT | by

Amazon is becoming more like Apple as it attempts to build its own ecosystem of hardware and digital content. In its latest bid, the company has launched a media streaming device called Fire TV, which will directly compete with other set-top boxes in the market such as Apple TV and Roku 3. Fire TV will include over 24 channels and allow users to stream video from Amazon, Netflix, Hulu, Youtube and some other outlets. Additionally, customers can buy gaming remotely and play games offered by Amazon. Looking at the features, it is easy to notice that the new device lags behind its competitors in some ways, but exceeds them in others. The adoption is likely to be mixed, as there is neither a clear competitive advantage nor a clear disadvantage. Without a doubt, this is another one of Amazon’s attempts to push sales of its digital content. The company has also been marketing its Kindle devices, including e-reader and tablet.

At just under $100, Amazon’s Fire TV is priced exactly the same as Apple TV and Roku 3. However, it boasts of a gaming pad that can be bought for an additional $40, a faster processor and more memory. Compared to Apple’s 2 GHz single core processor and Roku 3′s 900 MHz dual-core processor, Fire TV comes packed with 1.7 GHz quad core processor and GPU. This gives it a strong advantage in terms of navigation and processing, and the overall user experience is better, as expressed by a user in a review on Time. Additionally, Fire TV comes with voice search feature which is something that sets it apart from Apple TV. However, the voice search results include only Amazon’s listings while ignoring other applications such as Netflix. There appears to be some bias here which could put off some prospective customers. Amazon will also lose out on a lot of Apple customers who may prefer to sync their iOS devices to Apple TV as Fire TV offers such support only for Kindle Fire.

Our price estimate for Amazon stands for $373, implying a premium of 15% to the market price.

See our complete analysis for Amazon

Amazon clearly wants to sell as much digital content as possible given the consumer shift to Internet for media and entertainment. To do so, it not only needs to enhance its digital video and audio library, but also open up as many marketing and distribution channels as possible. Selling Amazon devices will help the company establish a strong customer base overtime, wherein it will have the ability to market and sell new digital products instantly to Kindle Fire tablet and Fire TV owners.

As an example, lets look at sales of Kindle devices. Amazon sells several models of Kindle e-reader and Kindle Fire tablets aimed at capturing the fast growing market for mobile products. We estimate that the sales of Kindle devices stood at roughly 20 million in 2013, bringing about $3.9 billion in revenues. However, the overall value of Kindle franchise extends beyond hardware sales and is a strategic pursuit by Amazon to promote and sell digital content. Based on our assumptions and estimates, we conclude that the company may be earning between $265 million to $530 million a year from e-books alone (for details read Estimating Kindle E-Book Sales For Amazon). But that’s not the end of it. Amazon’s digital sales from music and video orders are of magnitude higher than those from e-books. Morgan Stanley estimated Amazon’s digital media sales for 2013 to be around $3.8 billion and expects the figure to surpass $5.7 billion in 2014. This is still small in comparison to its overall revenues, but the growth is high. Fire TV is aimed at fueling the growth of the music and video segment.

See More at Trefis | View Interactive Institutional Research (Powered by Trefis)
/>

Like our charts? Embed them in your own posts using the Trefis WordPress Plugin.

 
 
 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Apple Pay
Apple Introducing a New Rewards Program for Apple Pay at WWDC
A report states that Apple will provide “perks” for the customers of its online payment service
 
 
Apple Introducing a New Rewards Program for Apple Pay at WWDC
A report states that Apple will provide “perks” for the customers of its online payment service
 
 
Apple Introducing a New Rewards Program for Apple Pay at WWDC
Apple Introducing a New Rewards Program for Apple Pay at WWDC
A report states that Apple will provide “perks” for the customers of its online payment service
 
 
12 Things an Apple Watch Can Do Without an iPhone
12 Things an Apple Watch Can Do Without an iPhone
We have compiled up a list of features that your Apple watch would be able to do by being connected to the Wifi only and not having your phone connected via Bluetooth.