On the heels of its big earnings miss and other disappointments, Amazon on Monday took a big step into TV.
The company launched the Amazon Fire TV Stick, a streaming device to rival Google's Chromecast. At $39, it's a big price drop from Amazon's $99 Fire set top box unveiled earlier this year. It's a bit more expensive than Google's Chromecast, but less than Roku's $50 Streaming Stick.
It has more bells and whistles than either. For the one payment price, subscribers will be able to stream everything from Netflix, WatchESPN to Hulu Plus, and of course Amazon Instant Video. Unlike Chromecast, it includes a remote control, though there's also a mobile app for controlling it. There's the ability to use voice search and Whispersync. It also supports gaming.
Why is Amazon introducing yet another streaming video play? It all comes down to getting more people to subscribe to Amazon Prime. If you buy a Fire Stick you get a free month of the service. And the company wants Amazon Prime subscribers because once they've committed the $99 a year to get unlimited free shipping, they're more likely to buy more stuff via the retailer.
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On Thursday's earnings call CFO Tom Szkutak said the company's investment in content for its Prime subscription is paying off, as people are watching and aren't dropping their Prime subscription. That also explains why the Fire Stick supports Netflix and Hulu Plus—both competitors to Amazon's streaming option. Amazon clearly isn't just looking to benefit from its own streaming video, but has grand ambitions to be the portal for all streaming video. (The Fire Stick is also available for $19 for the next two days if you're already an Amazon Prime subscriber).
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Amazon's latest dongle is clearly going up against Chromecast, but the competitive landscape includes Roku and Apple TV. All these products that enable easy streaming are great for consumers, especially those cord-cutters or cord "nevers," as it's never been easier to access a range of premium content via the Internet on your giant flat screen TV for relatively little money. It's also good for Netflix, as the more ways to watch Netflix makes the service more valuable to subscribers.
But is this investment in yet another piece of hardware worth it for Amazon? It all depends on how much consumers like the experience, and how fast it sells. Amazon's Fire Phone may have had a 3-D display system, but high tech advantages weren't enough to lure customers, hence the $170 million write-down this past quarter.