Cord Cutters rejoice, Amazon is your new best friend.
The ‘A-Ha’ moment.
I went to a barbeque last weekend and the topic of cord cutting came up. Probably because I just love talking about the future of technology, TV, and music, gaming and movies, hence the reason why I created this site.
My friends are not tech-savy, they are normal users. They used to have Cox cable, but due to financial reasons they cut the cord and went with Netflix and over the air. They switched to Netflix because that is a good enough solution for their current needs. They get a great library of second run content. I asked them if they felt like they were missing anything and their answer was a resounding “No.” I’ll be following up with them as their cable-less life moves foreword. I asked them if they had considered any other options like Vudu, Redbox on demand, or Hulu. They had never heard of Vudu or Redbox’s on demand services, they did know Hulu, but felt like their offerings weren’t that great for their usage at this time. I then asked them about Amazon Instant Video and again their answer was no. They are Amazon customers, but aren’t hooked into the amazing Prime service. I’m sure this conversation will be different in a few months time. This is why:
It is rumored that Amazon is going into the set top business. Amazon would be perfect addition to their Netflix setup. I’m guessing that Amazon will soon be going after them. Amazon hasn’t announced their latest offering, but my money is that Amazon will announce it at the same time as the next Kindle refresh. I am sure that Amazon’s set top box will be including Apple TV like functionality that will work across the board with Kindle tablets, Apple iPhones and iPads, and Android devices. Amazon, like Netflix wants to be everywhere.
Hulu’s Loss is Amazon’s opportunity.
Jeff Bezos wants to bring Amazon to the TV in a major way. Amazon Video on Demand (VOD) is already bundled with various TV’s and Blu-Ray players. Right now, Amazon is busily working on deals to get their existing video services on the latest offerings from Sony and Microsoft. The only problem with these is that Amazon doesn’t control the hardware. Amazon, like Apple wants to control the vertical experience.
What Amazon didn’t tell you is that they are going to go after the cord-cutters. Why? Because traditional cable is not as appealing as it was 5 or even 10 years ago. Consumers really love à la carte and once you make the switch, there is no going back to 200 channels of unwanted content. HBO gets this and will soon offer their own solution to this problem. Trust me, HBO has 122 million customers worldwide. This number will easily triple once they take the reigns off and loosen up their existing iron clad partnerships with the cable networks.
Amazon has been watching this space and has been looking at Roku, Boxee, and the other smaller set top makers with increasing interest. They were just waiting for their Kindle tablet experience to pan out.
Amazon is going to open the device to their Android App developers and media partners. The app will be the channel and third party developers will use this opportunity to tap into the game market. Someone will make an Xbox like controller so that you can play games that require it. Ouya should be paying attention.
Amazon might even beat Apple to this game. This could be the jump start that Cupertino needs. iOS developers have been waiting for Apple to turn on the stream, and Amazon’s entry into this market might give Apple the push it needs.
Amazon already has existing partnerships with the movie and TV studios who would love an additional retail channel. Amazon is also banking on Amazon Studios to bring over eyeballs. Like Netflix, Amazon wants to put out series all at once. The water cooler talk is not did you see the last episode of Game of Thrones, which season of Game of Thrones are you currently watching. This is also another ploy to make every user of Amazon an Amazon Prime customer. Who’s not going to want to collect their free set top box.
How much will it cost? My bet is $79 to new Amazon prime customers. What if you are already a prime loving customer? Then the set top box will be the cost of shipping $9.99 .
Jeff Bezos and company are known for selling at cost. The board members don’t mind. They’re into the long game, the very long game. Amazon will stop at nothing to be the thought leader in this category.
A year of Amazon will cost you $79 and a year of Netflix is roughly $108. We know that consumers are sensitive to prices. Amazon will complement Netflix for the time being, but Netflix is no slouch. They can afford to drop the price a couple of bucks.
The first generation device can be as small as the Roku 3 or even the Gamestick. I’ve seen these devices all over Asia and most of them are about the size of a USB thumb drive. The miniaturization is really impressive.
The Long Game
Amazon wins here because they can place their box on the front of the all so powerful Amazon.com home page. Amazon is willing to give up this premium placement because it doesn’t cost them anything. Amazon will never release numbers and instead rely on word of mouth marketing to help its box become dominant. The same Kindle strategy will work with their latest set top box. Get it in front of eyeballs, price the content aggressively and wait until the tides change. In 3 years time, Amazon will be the default set top box, much like Kindle is to e-readers.
Amazon isn’t known for their user interface, but that doesn’t matter. Amazon can fix this over time.
If I were Netflix, Redbox, or Vudu, I would be scared. Scared like companies were of Microsoft in the 90′s. Yes, Amazon with it’s low prices and happy shareholders are scary to competition. Once Amazon enters your space, prepare your exit strategy. It most certainly won’t be overnight, but over the course of a couple years. Amazon can wait you out without breaking a sweat.
And this brings me to my last point. Bundling. Think about this: buy a Kindle, get a discounted Amazon TV or vice versa. The real winners in this scenario are the consumers. With the average cable bill hovering around $90 a month, the cable providers will be watching Amazon tightly. Finally my dreams of the 90′s can come true, not only in Portland, but anywhere a couch and an internet connection is provided.
What are your thoughts?