Amazon Fire TV Threat To Netflix

Just as we were beginning to regard Netflix as a company on the verge of becoming big enough to really threaten the cable TV model â€" it's got more U.S. subscribers than HBO [1] â€" along comes Amazon with a new TV gadget that threatens to fence off Netflix inside a larger, Amazon-controlled TV universe.

Fire TV is a streaming video box that's a bit like Roku â€" you buy it, connect it to your TV, and it offers a bunch of movies and TV shows over the internet, including Netflix.

But Amazon has gone one step further by trying to fix the really serious problem viewers have when it comes to on-demand TV and video: The awful, awful, one-letter-at-a-time search interface you have to go through to find a show. How many hours of your life have you wasted guiding that little cursor around an alphabet grid with the up/down and left/right arrows on your remote?

Computers and even phones have become easy to use, with super-simple search. But TVs are still stuck in the 1980s when it comes to search. It's surprising no one noticed how feeble search on TV really is â€" until now.

Fire TV allows you to speak into the remote â€" "How I Met Your Mother!" â€" and the box presents you with the show you want to watch. No more hunting and pecking with the remote.

Netflix is available on Fire TV, which is a good thing for Netflix. But it may not be a great thing for Netflix. Fire TV viewers will find that Netflix is just one choice among a bunch. If they have subscribed to Amazon Prime ($99) they may not feel like shelling out an extra monthly fee for Netflix, too. Particularly when there is a bunch of free content right next to Netflix inside Amazon's box.

This arrangement gives Netflix whole new set of competitors, but everyone is competing inside Amazon's box, and against Amazon's "free" content (after you pay the Prime subscription).

It's a very clever move by Amazon.

Netflix will be fine as long as it continues to provide superior content, like House of Cards, the drama that is exclusive to Netflix. Viewers will pay for that.

But if Fire TV generates revenues that allow Amazon to create its own superior TV content â€" the company has already commissioned a new season of the political drama Alpha House â€" then, again, Netflix will find itself fighting inside a boxing ring designed by Amazon.

Do not expect CEO Reed Hastings to tolerate that for long, if it turns out that Fire TV hurts Netflix more than it helps it.

Disclosure: Jeff Bezos is an investor in Business Insider through his personal investment company Bezos Expeditions.

Links

1. ^{^} more U.S. subscribers than HBO (www.businessweek.com)

source: www.businessinsider.com