Amazon’s New TV Sets Are About More Than Selling Hardware

Amazon's New TV Sets Are About
Cheyne Gateley/VIP+

From Bigfoot to the Loch Ness Monster, our planet is home to mystical creatures many swear are real, but proof of their existence remains elusive. The tech industry has its own equivalent: a TV set manufactured by Apple, which analysts declared multiple times over the past few decades was in development. And yet no such product ever made it to market.

It’s not difficult to understand why the mere prospect of a TV from Apple ⁠— not to be confused with Apple TV, a peripheral device ⁠— was so intoxicating. Imagine if CEO Tim Cook was able to command an entirely new product category at the same magnitude his predecessor, Steve Jobs, achieved when the iPhone swallowed the market for mobile devices. Just picture how such a move could upset the natural order of the premium long-form entertainment world, where pay-TV giants are already seeing the stranglehold they once had on this market get shredded by the streaming revolution.

Lo and behold, there’s a pair of TV sets coming to market that will carry the branding of a tech giant. But here’s a plot twist: It’s not Apple.

Beginning Oct. 27, Amazon will begin selling the Fire TV 4-Series and Fire TV Omni Series, 43-inch 4K UHD TV sets priced at $300-$400. It’s a noteworthy juncture in the evolution of Amazon’s streaming-hardware strategy, which has progressed from the Fire TV dongle that could plug into most TVs to software that allowed other TV manufacturers, such as Insignia and Toshiba, to embed Fire TV within their sets. Now makers including Chinese TV giant TCL are reportedly making the 4-Series and the Omni, but with the crucial difference that it is Amazon, not TCL, that is the brand.

Are these new Amazon products the equivalent of what iPhone was to Apple? Hardly. That said, they could very well not only pave the path to that kind of breakthrough in the marketplace but accelerate a potentially huge battle among a lot of combatants from multiple industries because what’s up for grabs could shape up to be a massive revenue opportunity.

The race is on to be the company that can essentially serve as the front door for as many consumers as possible to a TV experience filtered through apps licensed by the TV manufacturer instead of pay-TV-commissioned linear channels. It's an experience that will yield data with the potential to give an unprecedentedly detailed sense of the audience, infused with advertising that allows the manufacturer to make a lot more money from consumers than just the meager returns from low-margin TV hardware.

But as big as that opportunity is, think about how much bigger Amazon can make it. Yes, these TV sets make a handy promotional berth for its Prime Video and IMDb TV platforms. But what's more significant is they would open an important new user-data spigot in homes already generating plenty marketer-friendly data from other Amazon products including Alexa and Ring, which ⁠— no surprise here ⁠— will connect to Omni and 4-Series.

And with Alexa powering voice commands to these new Amazon screens, think, too, of the potential for Amazon to harness its e-commerce prowess. We could be on the cusp of an evolutionary leap for the medium of television, to go from just a source of intrusive commercials to a vehicle for marketers to move down the proverbial sales funnel and enable transactions at a scale the more experimental efforts on this front have never achieved.

With eMarketer projecting the connected-TV ad market could approach $25 billion by 2024, Amazon is far from alone in this race. Roku is the market leader, having already made the jump from peripheral devices to software-embedded sets years ago, albeit in partnership with other companies. Google did the same, via Chromecast and notable software-integration deals with TLC and Sony. And of course, the traditional original equipment manufacturers , including Samsung, LG and Vizio, are making their own Internet-connected smart TVs.

Amazon isn't even the only Johnny-come-lately to this opportunity. Comcast, which could find itself elbowed out of a marketplace it once dominated as the TV world transitions from multichannel to streaming, is scrambling to maintain its position with the U.S. release this month of XClass TV, its own line of smart TVs. The company's Sky service in Europe is offering similar products, Sky Glass, and a XiOne dongle.

Curiously, it's Apple, the company most assume would be best poised to conquer this product category, that is at the back of the line. Its Apple TV product is regarded as an overpriced also-ran. Why no one in Cupertino ever saw fit to follow Roku and Google into software-integrated TV sets is a mystery given the move was deemed so obvious analysts couldn't help but dream it existed when it didn't.

For more on the smart TV marketplace, please click below to enjoy this webinar with industry leaders held earlier this month. For additional relevant data, see this special report released in conjunction with the webinar.