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Cable Technology Feature Article

March 13, 2014

Amazon to Ship OTT STB with Netflix and Hulu

By Tara Seals, TMCnet Contributor

Amazon’s over-the-top (OTT) streaming set-top could be shown off any day now, and it looks like it’s coming with Netflix and Hulu (News - Alert), not just its own Prime Instant Video service.

Amazon originally prepped the launch for the holiday shopping season, but had to postpone the debut for undisclosed reasons.

“I’ve now confirmed that this will indeed be the case, and that Hulu Plus will be available through the device as well,” said GigaOm’s Janko Roettgers. “However, some mid-sized, more niche-focused video publishers told me that they haven’t been asked to join.”

Businessweek broke the news about the plan last year, which calls for a standalone box that has built-in access to an a la carte video on demand (VOD) store, which features newer films and TV shows, and Prime Instant. Sources said at the time that is was also likely that Amazon would take an aggregation approach to third-party content for the STB.

The development isn’t that surprising: it almost has to embrace Netflix in order to compete with other offerings in the market, like Roku, which has Netflix and Hulu channels. Even Apple (News - Alert), which has a notoriously closed ecosystem for its devices, offers a Netflix app for Apple TV. Amazon already enables streaming video from competitors for the Kindle tablet via apps for Netflix and Hulu, among others.

Also, Prime doesn’t really directly compete with other over-the-top (OTT) services, considering that the video streaming is one part of a larger package that includes free shipping and is meant to be a pot-sweetener for its click-and-mortar e-commerce business.

Consumers already have a lot of options for third-party set-top boxes, all of which offer a different user experience outside of the cable/satellite/IPTV hegemony: Apple, Google (News - Alert), Roku, Boxee and even the venerable TiVo are in the market with their own TV “special sauce.” Amazon’s STB will be unique in that it will further the Prime business model, analysts said.

"We believe they are wedded to video within Prime and are simply against the idea of separating out a streaming video service," said researchers at BTIG in a recent report. "Amazon wants to drive Prime, utilizing video streaming as yet another 'sweetener' to induce subscriptions. Amazon appears to be taking a methodical approach to dialing up its investment in Prime streaming video, with each content investment measured against the growth in Prime subs, churn and lifetime value of a sub."

Developing its own set-top offers Amazon a way to showcase its video chops, add subscriptions for Prime and maintain consumer electronics parity with its rivals. It’s also a vector to gain a wider audience for its original content strategy, which it’s been investing in rather heavily. 

Edited by Rory J. Thompson

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