Amazon leaps into home entertainment fray with $99 Fire TV

NEW YORK/SAN FRANCISCO (Reuters) - Amazon.com Inc made a play for the increasingly crowded home entertainment arena by unveiling the $99 "Fire TV" video and game streaming device on Wednesday, with hopes of boosting its main online retail business over the longer term.

Amazon, which has been building its multimedia presence to tap the growing appetite for digital media, took the wraps off the device which can stream content from Netflix Inc, Hulu and other services - much like Apple TV or Google Inc's Chromecast.

Fire TV also offers a prominent platform for Amazon's own fast-growing streaming video service and a growing slate of original television programs and games.

With the square device that just about fits in the palm of one hand, Amazon jumps headlong into the heated competition for consumers' attention and an estimated $70 billion TV advertising market in 2014.

Tech leaders from Microsoft Corp to Apple Inc are vying for space on TV, the traditional family entertainment center where Americans used to spend most of their leisure time - although that has changed with the advent of the smartphone and tablet.

The device is one of several growth initiatives by Amazon, one of the world's largest online retailers. It is investing heavily in building fulfillment centers worldwide to expand its same-day delivery and grocery service. Earlier this week, Amazon approved six original television shows.

If Fire TV takes off, it could even help shape the way consumers shop online. Fire TV viewers may eventually be able to use their remote to buy a product directly off a commercial, analysts said, as Amazon's multimedia and online retail businesses become even more integrated.

"The company will eventually want to help you buy things in the living room," Forrester Research analyst James McQuivey said. "Only Amazon can piece that entire experience together in the living room and though we don't see evidence of that ambition here today, we should assume Amazon knows this and is planning on it."

JOHNNY COME LATELY

First, Amazon has to wedge itself into a market split fairly evenly between various nascent technologies, all of which are challenging cable companies' traditional death-grip on TV viewing.

Amazon is a late comer to the fast-growing set-top box market led by Apple, and some analysts were disappointed Amazon did not undercut its rival's price.

The market for devices like Apple TV is set to grow by 24 percent this year, according to firm Strategy Analytics said.

But Amazon promised that Fire TV, available now on Amazon.com, would be more powerful and easier to use than Apple TV, Google Inc's much cheaper Chromecast and Roku Inc's streaming video device.

"When we look at the living room, how do we make the complexity disappear?" Peter Larsen, vice president of Amazon's Kindle unit, said at a New York event to launch the product.

Fire TV's remote features a microphone that enables voice-activated search. Fire TV is integrated with Hulu Plus so users can see Amazon shows from their Hulu account, and Amazon said it may bring in other partners soon.

By next month, Fire TV users will be able to play thousands of video games with a controller that costs $39.99.

Amazon decided to develop the device after reading customer complaints on its website about lagging performance, cumbersome search and closed "ecosystems" on rival set-top boxes.

Larsen took shots at rivals Roku, Apple TV and Xbox, pointing out what Amazon considered to be flaws in search, access and performance with each of its competitors.

"If you add it all up, Fire TV has three times the performance and power of Apple TV, of Roku 3, of Chromecast," he said. "This is a powerful device."

Fire TV can predict what the user will watch and cue it up instantly, Larsen said. It also has a feature that uses data from IMDB to identify the music on screen as well as the actors and their filmography as they exit and enter the screen on TV.

An Amazon spokesman said Fire TV will be available at Best Buy later this week, and Staples soon after.

Shares in Amazon ended down 0.3 percent at $341.96 on Nasdaq.

(Reporting by Jennifer Saba and Liana Baker in New York; Writing and additional reporting by Deepa Seetharaman in San Francisco; Editing by Richard Chang)

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