Amazon's entry into the growing media streaming device market ignited the headlines when the e-tailer took the wraps off of Amazon Fire TV recently. Given the growth of the category, it's a smart move on the part of Amazon to drive its Prime Instant video streaming service further ahead, according to the NPD Group — and it will succeed because it goes beyond that.
Unit sales of network content devices have grown 78% in the last 12 months, according to NPD's Retail Tracking Service. Meanwhile, NPD's Connected Intelligence's Connected Home Forecast estimates 23 million Internet-capable households will own one of these devices by 2015. Apple, Google and Roku accounted for 88% of category revenue during the 12 months ending February.
Despite the crowded field, "there are plenty reasons for Amazon to make such a device," said Ben Arnold, executive director industry analyst at the NPD group. "A streaming video device ... fits in nicely with the rest of Amazon's product portfolio, which includes Amazon Instant Video, but also the Kindle Fire Tablet which, it was mentioned during the launch event, will have some interesting second-screen capabilities with the Fire TV. As far as network streaming devices go, the Amazon Fire TV appears to have most of the requisite features to make an impact on the market."
Even so, just as the network streaming device market has grown, video streaming has become a commodity feature found on most connected devices with screens (and many that just connect to a screen). What of that? Arnold said that Amazon's ambitions are wider than just video.
"As such, Amazon spent time Wednesday talking about features that help differentiate the Amazon Fire TV from the rest of the market," he added. "Voice search through the device's remote helps users navigate the library of content. A feature called Advanced Streaming and Prediction cues up unwatched movies and shows based on a user's prior viewing habits for faster load times. And, most notably, the Amazon Fire TV can act as a game console for mobile style games using Amazon's wireless game controller. We've seen a few of these features in other players (The Roku 3, for instance, can play games) but it's clear Amazon wants the Fire TV to be more than a video streaming device."
Ultimately, Amazon's technology decisions will force the market in new directions, he predicts. "I fully expect manufacturers to pack in more features and improve the user experience with predictive search and alternative interfaces, just as Amazon has done, but the stage is set for network content devices to do more than stream video," Arnold said. "The Amazon Fire TV's quad core processor means it can take on some client light PC tasks — things connected TVs and Blu-ray players can't do."
Google, Apple, and Amazon – the retailers – could conceivably use their devices to make the TV a new point-of-sale for things other than content.
"Opportunities also exist to tie these products in with home security and energy monitoring devices, making the TV a dashboard for those products (Google did just buy Nest after all)," added Arnold. "With the potential of these new features, network content devices could become the new disruptor in the living room. The question is, do consumers want more from them?"