Why You'll Want an Amazon Set-Top Box

Online video set-top boxes now rival smartphones for rumor mongering: Hot on the heels of the new $50 Roku Streaming Stick debut last week come yet more rumors that Amazon is planning to release its own set-top box for streaming video and music. That comes amid buzz about a possible new Apple TV. Plus, today (March 13), Amazon upped the price of Amazon Prime, the service you need in order to watch Amazon's exclusive and unlimited streaming content (including four brand-new shows), from $79 to $99 per year.

But with several Roku models, the current Apple TV, Google Chromecast, media-streaming game consoles, smart TVs and connected Blu-ray players, is there really room for yet another box from another company? And would you want it? The answer may be yes — to both questions. 

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Still a young market 

One reason an Amazon box would be able to compete is that most people don't have a streaming box (or stick) yet, but many are likely to buy one. "As of Q4 '13, we estimate that 39 million of the 90 million U.S. [Internet-connected] homes have at least one TV that is connected to the Internet," John Buffone, of research firm NPD's Connected Intelligence division, told Tom's Guide by email. "Thought about in reverse, that means 51 [million] (or 57 percent) of homes do not yet have a connected TV or attached device."

And many of those people are likely to buy one. According to the Consumer Electronics Association, the number of "digital media players" (as it calls set-top boxes and sticks) sold rose from about 6.5 million in 2012 to 8.8 million in 2013, and CEA expects sales to hit 11 million in 2014. Apple alone said it sold more than $1 billion worth of Apple TVs last year.

Plus, most homes have more than one TV. Because parents sometimes hand off older computers or mobile devices to their kids, they might set up an older TV box on the TV in the kids' room, Buffone said.

But why a set-top box from Amazon?

People like Amazon video — a lot

Amazon Prime Instant Video is very popular — not as big as Netflix, but bigger than almost every other similar service. In a survey of 5,000 people from Internet-connected U.S. homes, NPD found that the top Internet video services watched on connected TVs or attached content devices (like set top boxes) are, in order of popularity, Netflix, YouTube, Amazon and Hulu. And in a new survey of 40,000 U.S. adults released this week, market research firm Harris Interactive found that Amazon Prime Instant Video is second only to Netflix in "brand equity" — in other words, how well people recognize a brand and like it — for streaming video services.

While the Amazon app is pretty easy to find on game consoles (still the biggest category for streaming video to TVs), it isn't as easy to find on set-top boxes, the fastest-growing category. Apple TV doesn't have it, and is unlikely to, as the companies are competitors (although, admittedly, you can stream the Amazon iOS app to Apple TV using AirPlay). Amazon isn't supported on Chromecast, either. Roku does have an Amazon app, which is one of its most popular. But Roku now sidelines all of its apps on the home screen by promoting video-on-demand service M-GO, which shares a cut of its revenue with Roku. 

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And there are a lot of reasons to watch Amazon lately. While its catalog isn't as big as Netflix's, Amazon has a number of exclusives. The biggest category of exclusives is Nickelodeon kids' shows, such as "Dora the Explorer" and "SpongeBob Squarepants." For parents, the kids content alone is pretty compelling. However, Amazon just increased the price of Amazon Prime from $79 to $99 per year, so Amazon's wealth of "free" content for subscribers just got more expensive.

Amazon also has a few grown-up exclusives, like "Downton Abbey." Plus, the company is exploding with new original shows. In addition to its current hit, "Alpha House," Amazon just approved four new TV pilots for production: crime drama "Bosch," starring Titus Welliver; apocalyptic drama "The After," by "The X-Files" creator Chris Carter; dysfunctional-family comedy "Transparent," with Jeffrey Tambor; and musician mayhem comedy "Mozart in the Jungle," starring Gael García Bernal.

What could an Amazon box offer?

None of these might be a reason to replace a Netflix subscription with Amazon Prime Instant Video, but they are reasons to have both services. The question is, how can Amazon make its possible TV box more compelling than Roku or Apple TV? For starters, it can't be an Amazon exclusive. Given its popularity, Netflix is a virtual requirement for any streaming video player, as are YouTube and Hulu.

Perhaps Amazon can make its device even cheaper than Roku's $50 Streaming Stick — maybe free with an Amazon Prime annual subscription, which viewers need to watch Amazon's original shows and many of its other programs. (Otherwise, they pay à la carte and don't get the original content.) A "free" online TV box might soften the blow of the $20 price hike for Amazon Prime.

Amazon could also offer a better user experience. Roku's interface is well designed, especially with its ability to search for content across about a dozen services at once. But one of Roku's selling points, its roster of more than 1,200 channels with more coming daily, might be a disincentive to people who just want something simple.

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There are also rumors that Amazon might launch a streaming music service, which could be an exclusive on its TV box (and another reason to pony up for Prime). Likewise, there are rumors that the box might double as a light-duty game console — far from the power of the $499 Xbox One, but perhaps more powerful than the "Angry Birds"-class games on the $100 Roku 3 device. If an Amazon TV box runs Android (as the Kindle Fire does) and has access to the full Google Play store (as the Fire doesn't) the selection of games could be substantial.

There's a chance that an Amazon TV box might not be compelling enough for you to pick it over a Roku. In fact, it's not even definite that Amazon will release a set-top box. But it looks like a lot of people will be buying TV boxes in the coming years, and there are a lot of ways that Amazon could make one that is appealing.

Follow Sean Captain @seancaptain and on Google+. Follow us @tomsguide, on Facebook and on Google+.

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