Catching Fire (TV)

Amazon, smart as hell


Another day, another living room streaming device.

At first glance, not much about Amazon’s new Fire TV box stands out to me. Sure, it may be faster than other boxes. But were people not buying the Apple TV because it is slow? No.

The early reviews of the device focus on two key innovations. First, it has voice search. It sounds like the right idea, but it’s very limited (it only works with Amazon and Hulu content right now, apparently). Second, the Fire TV can play games. I do think this is a wise differentiator. Though the gamepad (an extra $40) sounds like a piece of junk. And I believe this advantage will be short-lived.

This is what $40 looks like.

So why exactly is Amazon getting into this space?

Even with the investments in the Prime Video catalog, this wasn’t quite clear to me. It doesn’t sound like the Fire TV is a must-have, or even the clear-cut winner in the space. It simply sounds like an okay entrant.

But two things David Pierce brought up last week make the situation much more clear:

Amazon doesn’t innovate by crafting new product categories, like Apple does. It also doesn’t make much money selling its hardware. Instead, it takes all the data it gathers as the world’s biggest online retailer, breaks down exactly what’s available and what consumers want, then produces a piece of hardware that it can sell cheaply in order to bring consumers into its ecosystem. Just as Netflix created House of Cards to satisfy the particular tastes of its viewers, Amazon made the Fire TV because millions of buyers are already looking for it. To understand the Fire TV is to take one glance at Amazon’s best-selling electronics list: two Roku models, Google’s Chromecast, and the Apple TV are the only non-Amazon devices in the top 10. The world’s largest online retailer just took on all three.

There you go. Why do you rob banks, Willie Sutton?

“Because that’s where the money is.”

Thanks to a little website called Amazon.com, Amazon not only can see what products are successful for other companies, they can use that homepage to alter any such landscape.

Amazon’s homepage for the past week.

As Pierce continues:

This sort of inside-out production isn’t without precedent. Years ago, before Samsung was a household name in consumer electronics, it was a key manufacturer of the internals for smartphones and tablets. The Korean titan learned the business from the inside out, and mastered the supply chain in an effort to make phones cheaper and more efficiently. Amazon’s experience is equally useful: it studies people’s shopping and usage habits, and gives buyers both space and incentive to report what they like and dislike. Its focus group is the entire industry, and it collects data before ever building a prototype. Amazon’s customer reviews said the Roku was slow; the Fire TV is fast. Customers complained about searching with a remote; the Fire TV’s flagship feature is the ability to find things to watch using your voice. Amazon doesn’t have to guess what people want, it just has to wait for others to get it wrong.

Fascinating. It’s not just that Amazon can look at sales data to figure out what they should produce, they can look at the feedback on individual products to decide how to produce something differently. Amazon.com isn’t just a data pipeline, it’s a focus group.

Of course, as we’re all well aware, focus groups don’t necessarily create great products. In fact, they often create awful Frankenstein-like products. But I’m not sure how much that matters to Amazon. They’re not making these devices to win awards or again, even to make money. They’re making them to please their customers. And on paper, the Fire TV sounds very pleasing. It checks all the boxes.

My god, it’s full of checked boxes. (Well, except HBO Go, which is undoubtedly coming faster than Winter in Westeros.)

And if their customers ultimately don’t love this first Fire TV, Amazon will simply tout it as the vaguely fastest-selling somesuch and then come out with another one to trump it. And it will sell roughly twice as fast as the last model’s never-quite-disclosed numbers. They almost can’t lose.

But. Again, that doesn’t mean this is a product you should buy. In fact, it doesn’t really sound like a product you should buy. It sounds more like an experiment in feedback and production that you may buy anyway simply because Amazon is smart and uses their advantage wisely. It has worked in the past with the Kindle and Kindle Fire, so why not here as well?