streaming video

Amazon throws a firebomb in the battle for your living room

April 2, 2014: 4:39 PM ET

Sorry, Roku.


FORTUNE -- The battle to control your living room is heating up, and today Amazon (AMZN) stepped up its efforts with Amazon Fire TV, a box for streaming video through a television set.

The battle over software performance and specs is a race to the bottom in terms of price. The ultimate winner will be the one offering the best -- and most -- content. In that respect, Amazon is off to a strong start.

Fire TV brings gaming, TV, music, and movie programming from Netflix (NFLX), Hulu Plus, WatchESPN, VEVO, Showtime, YouTube, Pandora, iHeartRadio, and Amazon's own Prime Instant Video. Partnerships with WWE Network, MLB.TV, WATCH Disney Channel, and WATCH ABC are in the works.

With its new Fire TV service, Amazon is now competing with similar offerings from Apple (AAPL) and Google (GOOG), as well as Roku, the only independent player with strong market penetration. The Amazon device sells for $99, the same as Apple TV. (This came as a surprise -- some had predicted the devices would be cheaper in order to compete with Google's $35 Chromecast device, or even offered for free. Roku prices range from $49.99 to $99.99.)

MORE: One big omission from the Fire TV announcement: No Amazon music

Amazon VP Peter Larson presented the device as a better alternative to Chromecast and Apple TV, while cheerily quoting negative reviews of each. Fire TV has accurate voice search, a simple remote, a unified way to find content, and fast streaming speeds, with "no more dreaded spinner" to signal a buffering video stream. Fire TV also has innovative features, such as photo synching with a smartphone, and a kid-friendly tab with a timer and a safety feature. But these fixes and features could be quickly matched by Google and Apple.

The big problem no one company can completely solve is a comprehensive content offering. None of these companies have created a box to rule them all, because none of them can truly get all of the content in one place. Sure, Amazon emphasized how open its platform is -- a "huge, open ecosystem of entertainment," the press release boasts.

But "open isn't really open if everyone isn't open," said Rich Greenfield, a media industry analyst with BTIG Research. And an ecosystem isn't an ecosystem until it's full of flora and fauna -- that is, content.

A truly open platform requires a two-sided exchange, and Amazon, Apple, and Google aren't interested in sharing content with each other. In this instance, Fire TV includes streaming from many popular services, but does not include iTunes. HBO Go is also notably absent, despite the presence of rival Showtime. An Amazon rep assured me that more content partnerships were in the works.

MORE: How to deepen customer loyalty: Be transparent

And yet, openness has become a tired trope among media executives: People want to consume whatever content they want, wherever they want, whenever they want. Slowly, tech platforms have convinced the owners of that content -- the movie studios, gaming studios, record labels, and TV channels -- to let them distribute it to consumers, whenever and wherever they might want it. It's been a slow, uphill battle, marked with lots of exclusive rights and broken deals. There is even a whole class of startups that exist just to tell you which service streams which movies.

Complicating things, Netflix, Amazon, Hulu, and others have begun to create their own programming as a draw for consumers. That way, even if a platform isn't comprehensive, users still want to subscribe for access to a hot new show that can't be found elsewhere.

All of this is bad news for Roku, another TV streaming service that's backed by $127 million in venture funding and was expected to go public in the coming months. Some of Roku's funding came from Netflix itself; Roku was meant to be a part of Netflix until the company decided to avoid hardware. Now Netflix's service is accessible on all of Roku's competitors, and Roku has little in the way of exclusive content.

It's too early to call a winner in the battle for your living room. But Roku, pitted against Apple, Google, and Amazon, now looks like a David among Goliaths.

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