Amazon Channels a Cheaper Television Experience

[Karan rocks]

Amazon Channels a Cheaper Television Experience​

After I wrote my article on Wednesday about Amazon’s new Fire TV set-top box, I received an email from a reader that summed up the retailer’s challenge — and opportunity.

“I am just writing with a follow-up question about these boxes being offered by Amazon, Roku, Apple and others,” Mary Woodhead wrote. “I can’t quite get an understanding of their advantage … I can stream Netflix on my television as things stand. I would love to break free of my Comcast bill but am not quite willing to give up watching tennis and cycling.”

How, in other words, do I get more of what I want for less? On this question hinges the future of television and the companies that are trying to reinvent it. Amazon, for instance, will need to persuade Ms. Woodhead of one of two things:

– She will derive enough benefits from Amazon Prime, which gives access to a video library, and Fire TV, which plays the movies on a TV, to make it worth paying an additional $225 on top of what she is paying Comcast, which is about $220 a month for Internet, phone and cable.

– Or that Amazon is offering such a great package that she does not need Comcast anymore. She can then cancel its cable service and perhaps — this is Jeff Bezos’s dream — use the hundreds of dollars she saves to buy things on Amazon.

In theory, at least, a set-top box should be pretty compelling when compared with cable.

“Instead of spending $80 a month for 500 channels of nothing on,” said Bill Rosenblatt, president of GiantSteps Media Technology Strategies, a consultant firm, “you get to pick what you want to watch when you want to watch it.”

But if it were really that simple, he added, on-demand entertainment would have already triumphed. There are two big hold-ups, though.

“First, on-demand TV is something that consumers don’t understand, because they have no experience of it. It’s like on-demand music services (Spotify, Rhapsody, Beats Music): great idea, but it’s a new consumer behavior,” he said. “On-demand music with full major label licensing has been around since 2002 but even now there are, I’m guessing, barely 10 million users of it in the U.S. Introducing new consumer media behaviors is very hard and takes a very long time.”

He continued, “By comparison, cable is the same as broadcast – just more channels and you don’t have to adjust an antenna. And similarly, iTunes is just like a record store – except bigger selection and you don’t have to leave your house. (Ditto Amazon and bookstores.) Eventually one of the Internet video services is going to figure out continuous programming (think Pandora for TV) and that will make a big difference, but rights are a big obstacle to that happening.”

The second problem is the one that Ms. Woodhead alluded to: Comcast is her Internet provider. “Cable companies are very slow in offering ‘bare’ Internet service because they know that once they do, their subscription pay-TV businesses will go into free fall.” Mr. Rosenblatt said. “Paying $80 a month for cable versus $8 a month for Netflix – it’s not quite an apples-to-apples comparison in terms of programming, but it’s pretty scary to pay-TV providers nonetheless.”

What might help clarify this situation for Ms. Woodhead is the increased competition Amazon is bringing to the market. That will force all the players to sweeten their deals or at least be explicit about what they are offering. Who can give her the cycling and tennis she wants at a price she craves?

Amazon, I have no doubt, will relentlessly try to win over Ms. Woodhead’s heart. How much programming will it take? In my article, I wrote, incorrectly, that the service would make its debut with no sports channels. Fire TV actually has several, even if you don’t buy Amazon’s argument that channels like Showtime are sports channels because they sometimes show sports. Roku, by comparison, lists 66 sports channels, but then it cannot ship me headphones or popcorn the way Amazon does.

Amazon says it will rapidly add more sports programming, and presumably other kinds too. This will cost a bundle. Perhaps that is why Amazon stock fell $8, or more than 2 percent, on Thursday.

http://bits.blogs.nytimes.com/2014/...vision-experience/?_php=true&_type=blogs&_r=0