One possibility is the company could be chasing more advertising dollars, and more knowledge about its customers, said James McQuivey, an analyst at Forrester.
McQuivey said that he expects Amazon to roll out some sort of streaming device, either a box or a console, along with a gaming controller and offer users a tiered system of paying for content.
"If Amazon says we have Netflix, but we also have all of this video collection that we are going to give you for free that is ad supported, it could give them some traction," he said. "Their long-term goal is they are not interested in competing with cable companies, but using your TV viewing to learn more about you and offer you a TV-based commerce experience."
But the only way the company can make that happen is if the price is right, McQuivey said.
If Amazon does launch a TV box, it won't just be competing with the more expensive Apple TV, it will also have to go up against competitors who are aggressively pricing similar products.
Roku also sells four products with varying streaming capabilities ranging in price from $49.99 to $99.99. Its two cheapest devices consist of a streaming dongle, which only works with HDTVs, and a set-top box, which basically has the same capabilities but works with almost any TV.
Both of these devices enable the user to stream more than 1,000 entertainment channels, including Netflix and Amazon Instant Video. However, only the dongle has the capability to broadcast content to the TV directly from Netflix and YouTube apps.
The company's two more expensive devices, which are $79.99 and $99.99, are both set-top boxes and pretty similar in function, but the more expensive box only works with HDTVs and has a few additional features, including a faster processor.
Amazon's toughest pricing competition, though, comes from Google's $35 Chromecast.