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An Amazon set-top box would be cheap, might streams others' content

Lucas Mearian | Oct. 7, 2013
It's not clear Amazon can launch the device in time for the holidays

Instead, he believes Amazon will release the box shortly after the holidays. If it does push a box out in time for the shopping season, it would likely be a basic model with few apps.

"Then, in the beginning of 2014, they will begin adding third party apps," he said.

Amazon's timing couldn't be much better.

The number of U.S. broadband households with a streaming video media device, such as a Roku or an Apple TV, has doubled since 2011. Today, 14% of households have a set-top box, according to a recent report from Parks Associates.

In just four years, the number of connected TV devices sold worldwide will double, reaching 330 million a year. At the same time, the average price for a set-top box will continue to decline even as annual sales revenue doubles. That's because more households will have smart TVs, gaming consoles, Blu-ray players and streaming video media devices, Parks Associates' said.

Roku is the most-used streaming video media device in the U.S., according to Parks Associates. That's based on an independent survey of 10,000 U.S. broadband households the firm did earlier this year. Among households with a streaming video media device, 37% primarily use a Roku compared to 24% that primarily use an Apple TV.

"Innovations such as next-gen game consoles and 4K or ultra-HD TVs will boost unit sales for these devices, but overall, consumers are reluctant to replace these big-ticket items solely for smart upgrades," said Barbara Kraus, research director for Parks Associates. "As a result, streaming video media devices will have a thriving market, because they can offer innovations such as streaming video at low prices. Devices such as Roku's streaming players and Google's Chromecast will benefit from these market conditions."

In July, Google announced Chromecast, a $35 USB stick will allows consumers to stream Netflix, YouTube, Google Play and other web-based content services to their TVs from smartphones, tablets and the Chrome browser.

Google's Chromecast media streaming device

Paul O'Donovan, a principal analyst at research firm Gartner, said a set-top box allows Amazon to sell to its customers in a way that wouldn't be available on other platforms -- and it would help Amazon gather information on customers from the way they use the box.

O'Donovan believes Amazon is part of a growing trend.

"Definitely more [set-top boxes] will pop up in the near future -- perhaps even one from Intel," he said. "The growth in video consumption appears to have no bounds at the moment. So more consumption will always lead to more players entering the market to satisfy demand."


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