Amazon leaps into home entertainment fray with $99 Fire TV

Wed Apr 2, 2014 7:06pm EDT
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By Jennifer Saba and Deepa Seetharaman

NEW YORK/SAN FRANCISCO (Reuters) - Inc made a play for the increasingly crowded home entertainment arena by unveiling the $99 "Fire TV" video and game streaming device on Wednesday, with hopes of boosting its main online retail business over the longer term.

The square device, which just about fits in the palm of one hand, streams content from Netflix Inc, Hulu and other video services - much like Apple TV or Google Inc's Chromecast.

It also offers a prominent platform for Amazon's own fast-growing streaming video service as well as its growing slate of original television programs and games. Amazon will also sell a separate controller for gaming that costs $39.99.

Amazon, which has been building its multimedia presence to tap the growing appetite for digital media, is now jumping headlong into the heated competition for consumers' attention and an estimated $70 billion TV ad market. It took the wraps off the Fire TV at a rare Apple-style media event in New York.

Analysts were split on Amazon's prospects. Some said its strategy to pitch the Fire TV as an option for casual gamers would set the box apart. Others were disappointed Amazon did not undercut its rivals' prices in keeping with its pricing strategy on the original Kindle Fire tablet.

"They created a product we didn't need," said Wedbush analyst Michael Pachter.

The Fire TV competes in a market that is set to grow by 24 percent this year, Strategy Analytics said. But that's off a low base: streaming boxes have still not made much of a splash, partly because game consoles from Microsoft, Sony and Nintendo -- not to mention "smart" TVs and DVD players -- already stream Netflix and other popular services.

Tech leaders from Microsoft Corp to Apple Inc are vying for space on the TV, the traditional family entertainment center and where Americans used to spend most of their leisure time. That has changed with the advent of the smartphone and tablet.   Continued...

Amazon's vice president of Kindle, Peter Larsen speaks to media as he displays the Amazon Fire TV during a news conference in New York, April 2, 2014. REUTERS/Eduardo Munoz