Amazon faces delays in the launch of its planned media streamer to compete with the likes of Apple TV and Roku. Some reports suggest the launch may be pushed back beyond the all-important holiday season. It is understood the box is based on a version of Android, similar to its Kindle Fire tablets, and it could run apps and games, as well as streaming media.
“It’s been a busy few months,” said Jeff Bezos, the founder and chief executive of Amazon. He said in the last quarter the company had “signed up millions of new Prime members” for the subscription service that for customers in the United States includes unlimited access to movies and television shows through Prime Instant Video.
Amazon has not provided any figures but Tom Szkutak, its chief financial officer, said in a quarterly earnings call that “we are getting great usage from a broad set of customers on Kindle as well as other devices and the adoption is going very well.”
The addition of a media streamer would clearly complement the Kindle Fire tablet and offer access to the Amazon Prime library of movies and television shows.
The project is apparently codenamed ‘Cinnamon,’ and the media has dubbed the device ‘Firetube,’ although ‘Firebox’ seems a possibility, but it may well retain the Kindle brand.
There is also the prospect of being able to use Android apps and games on the television screen. While there are other devices that can do this, like the OUYA Android games console, Amazon is in a strong position to promote and cross sell its products and services.
Amazon recently cut the price of its Kindle Fire HD 7-inch tablet to £119, for the version that carries personalized promotions, possibly in response to the launch of the Tesco Hudl at that price point.
The larger Kindle Fire HDX with a 2560×1600 8.9” screen, will be available from £339 and going up to £489, which is still less than a top of the range iPad but by no means a budget option.
The combination of a tablet and a media streamer connected to the television is one of the most disruptive approaches to displacing the dominance of the traditional set-top box and remote control.
Neither Apple nor Google has got it right yet, although not for want of trying, so there is still a window of opportunity for a company like Amazon to create its own device ecosystem, but missing a holiday season launch could be critical.
Amazon Prime Instant Video is available in the United States on a range of devices, including smart televisions, games consoles, Apple TV and Roku boxes, and Amazon Kindle Fire tablets.
In the United Kingdom and Germany, Amazon operates its wholly owned subsidiary LoveFilm, which competes directly with Netflix.
Netflix is meanwhile delivering impressive results, reporting 40 million members, up from 30 million over the year. Almost 30 million of its paid up subscribers are in the United States, with over 8 million more internationally.
That resulted in headlines that Netflix had overtaken HBO in subscriber numbers, based on some analyst estimates. Yet Time Warner reported that at the end of 2012 it had 41 million premium pay subscribers in the United States and 73 million across the rest of the world.
Time Warner Networks, comprising Turner and Home Box Office, recorded $3.8 billion in revenues in the quarter to June 2013 and produced $1.3 billion in operating income.
Netflix made only $7 million free cash flow in the quarter to September 2013, on revenues of $1,106 million, and its international business continues to make a loss, or as the accountants put it, a negative contribution margin.
Amazon, the largest online retailer in the world, reported sales of $17,092 million in the same period, with operating expenses to match, recording a loss of $41 million, or as accountants put it, a tax asset.
So on the face of it, HBO generates significant profits, and while Amazon continues to make losses, it is a much bigger business than Netflix.