The world's largest e-commerce company on Wednesday unveiled Fire TV, an Internet video-streaming set-top box that plugs into an HDTV and will compete against the likes of
It's Amazon's latest move in a broad strategy to become an entertainment juggernaut, which includes streaming content through its Amazon Instant Video service and pumping out original programming via Amazon Studios, its in-house production arm. Adding a set-top television box to the mix will bolster those efforts, furthering its reach into consumers' homes.
It's also a nod to the lasting importance of TVs. Despite much talk about consumers rapidly shifting their viewing habits to smartphones and tablets, the television continues to be the device of choice.
The average American spent a whopping 185 hours in front of the TVs in December, compared with 34 hours and 21 minutes on mobile devices — which includes activities such as checking social media and playing games, according to a February report by Nielsen.
Unlike books and online shopping, in which Amazon clearly dominates, it faces a crowded market when it comes to video streaming and entertainment.
Wedbush Securities analyst Michael Pachter said he was underwhelmed by the Fire TV, calling the box a "me-too" device with pricing similar to rival products. The retail price of Fire TV is $99, the same as Apple TV. Roku 3 sells for $100.
Pachter said Fire TV's hardware was unimpressive and noted that Amazon missed an opportunity to release a highly differentiated product.
"I don't see this as helping them in any way," he said.
But the breadth of content available on the Fire TV and added features such as gaming and voice control could up the ante for competitors, said Piper Jaffray analyst Gene Munster. In particular, Apple may feel pressure to improve its Apple TV box, which is popular among the company's loyal fan base but is considered to have a lot of untapped potential.
"The launch of the Amazon Fire TV highlights Apple's necessity to aggressively update its Apple TV offering and ultimately introduce a full television," Munster wrote in a note to investors. "We believe that Apple will launch at least an updated Apple TV by the back half of 2014, if not sooner."
Shares of Amazon were little changed Wednesday. Its shares fell $1.03, or less than 1%, to $341.96. The launch of the device had been expected for weeks.
Although Amazon was expected to announce a small dongle similar to Chromecast and the new Roku Streaming Stick, the Seattle company instead revealed a black rectangular box about the same size as the Apple TV and Roku's set-top devices.
Fire TV comes with a small remote control, similar to those used with Roku and Apple TV. But unlike its rivals, the Amazon remote comes with a microphone that users can speak into to search for content.
"Fire TV has voice search that actually works," Amazon said on its website. "The old way of searching with a TV remote — scrolling and clicking one letter at a time on an alphabet grid — is painful. With Fire TV you simply speak the title, actor or genre into the remote and you're done."
Fire TV streams online content by connecting to users' Wi-Fi networks and supports up to 1080p HD video. The device can stream content from Amazon,
Notably, HBO Go is not yet on Fire TV, but an Amazon spokesman said the company is working with the pay-TV network to make it available. Amazon Fire TV users would still need a pay-TV subscription for HBO to access HBO Go.
The long-anticipated Fire TV device is the latest platform for Amazon's own Prime Instant Video, which the company hopes will attract people to its $99-a-year Amazon Prime service that gives subscribers free two-day shipping and access to its on-demand streaming library as well as original shows.
Amazon has been making deals with programmers to get more content for its service. It recently secured exclusive rights to stream the popular
The company has also tried to compete with Netflix by making its own shows for Prime Instant Video, including the political comedy "Alpha House" starring
The Fire TV also comes with gaming capability.
Customers can play popular games such as "Minecraft," with thousands more titles coming soon. Many games are free, while paid games will cost an average of $1.85. Amazon is releasing a $39.99 device called the Fire Game Controller.
Fire TV also has a feature called FreeTime, which is designed for children. Parents can choose which content to allow and which to restrict, and can also set daily screen time limits.
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