There’s a rumor in circulation that Amazon has been
working on a DVR that would allow users to record live TV, and then
stream that content to a smartphone and other mobile devices.
Amazon aims to mount a direct challenge to DVR pioneer TiVo — a company that was at the
forefront of digital video recording 20 years ago — according to a flurry of reports stemming from a Bloomberg article published earlier this week.
The Amazon DVR, reportedly codenamed “Frank,”
will work with Fire TV devices, but it is unclear if it will feature Amazon Prime Video streaming as well.
Amazon’s Lab 126 research and development center — the group
behind the creation of the Echo speaker — has been working on the DVR, according to
Bloomberg.
Amazon isn’t exactly late to this market, but its Fire TV products currently stream live content only from partners such as HBO via the Amazon Channels service. The Amazon Fire TV
set-top boxes, which are among Amazon’s best-selling products, are
unable to record or otherwise store video locally. Nor can they stream content to another device, such as a mobile phone.
By adding DVR functionality, Amazon essentially could take on cable/satellite pay-TV
services, providing the ability to record and location-shift content in a similar fashion.
DVR for Cord Cutters
Amazon’s strategy could be to go after the growing “cord cutter” and “cord never” market — individuals and households who opt not to
have a pay-TV service, and instead get content from other sources,
including streaming media.
“It’s likely aimed primarily at cord cutters and cord nevers; both
groups are growing quickly as users turn away from traditional TV and
legacy delivery from pay-TV operators,” said Jim O’Neill, principal
analyst at Ooyala.
“But it’s very likely that even users who have pay-TV in their homes
are watching video from OTT providers and, depending upon where they
get their broadband services, that a storage device would be worth
having,” he told TechNewsWorld.
“More than half of households that subscribe to pay-TV also subscribe
to an SVOD service like Netflix, Hulu or Amazon Prime,” added O’Neill. “If they want to keep content on hand, they very well may use the
Amazon box.”
Capturing Content
The key missing piece to Amazon’s strategy is where, exactly, users of
its DVR would get content. While premium content could come via Amazon
Channels, that still would leave the ability to access local content both
figuratively and literally up in the air.
“One possibility is an antenna, which is actually an important source
of TV for a minority of U.S. viewers,” suggested Colin Dixon, principal analyst at nScreen Media.
“While there has been a
slowdown in adoption, antennas picked up last year,” he told
TechNewsWorld.
Another possibility could be streaming of broadcast network content,
including from local stations.
“We are seeing an uptick in the number of broadcasters — local
broadcasters — who are making locally generated content available
online, and we expect that number to accelerate,” said O’Neill.
“You can watch CBS All Access through Amazon’s Fire devices, so that
content also is likely to be available to save; and Fox, ABC, and NBC
all have an increasing amount of their programming online, so having
the Amazon box likely would allow you to record and save that
content,” he added.
Another possibility is that Amazon could take the route of past
products — including some TiVo units as well as the now defunct Moxi
box — and utilize a cable card to replace a subscriber’s
traditional set-top box.
“I would actually be shocked if Amazon would support cable cards
today,” said Dixon. “That technology has been on the decline, and few
TVs actually ship with a cable card slot, so cable card support is
lukewarm at best.”
Live Play
Live content could come from online “channels” and other streaming services. Instead of providing another device that simply could be used to
record traditional linear channels from pay-TV outlets,
Amazon could pioneer a DVR service for streaming content.
“Over the past 18 months and longer we’ve seen a renaissance in live
content, and a lot of that content is moving online with consumer
habits,” said Brett Sappington, senior director of research at Parks
Associates.
“It isn’t just traditional broadcasting but is Facebook Live and
Periscope, and now Twitch is live-streaming content,” he told
TechNewsWorld.
“Amazon is getting rights to cover sports, which a few years ago would
have been unthinkable — so this just shows how the market is
changing,” Sappington added. “For a company that has online and cloud services,
it makes sense for this live play.”
Prime Objective
Another unanswered question is where Amazon Prime Video will fit in, but
it would seem like a natural extension. A DVR offering could allow
Amazon to gain traction on Netflix, which has forged deals to be
accessible not only through smart TVs and Blu-ray players, but more
recently on pay-TV set-top boxes.
Amazon recently has been making headway in the latter category.
“A few weeks ago there was news that Amazon Video would launch on
Comcast’s Xfinity boxes,” said Kristen Hanich, research analyst at
Parks Associates.
“We’ve also seen that Apple is forming partnerships to act as a
streaming media portal, and that is a direction Amazon might be going
down as well,” she told TechNewsWorld.
Such partnerships with streaming media services suggest that the pay-TV companies understand that the market has been changing in terms of how viewers get content, and it shows a willingness to accept that more people may forgo the cord in the future.
“This likely is not a short-term play for operators, although there
may be some that begin to look at Amazon Prime Video as an alternative
to offering their own pay-TV services, especially among Tier 2 and
Tier 3 providers,” said Ooyala’s O’Neill.
“Offering a TV service is an expensive proposition, and some smaller
telcos and cable companies have already opted out, choosing to focus
on their broadband business,” he added.
“Interestingly, Charter and Comcast, during their earnings calls
or investor meetings in the past few months, also have chosen to direct
more attention to their broadband businesses,” noted O’Neill.
There are just far better margins in the broadband business
than there are in the pay-TV business.
“So, could Amazon Prime be offered as an alternative to pay TV?”
pondered O’Neill. “Absolutely. It already is the option millions of
cord cutters and cord nevers have decided on.”
The TiVo Killer
Why Amazon is going after TiVo specifically is another question
to consider, especially as other early DVR pioneers — notably Replay TV
— have gone by the wayside. TiVo remains a significant player, but
Amazon’s strategy to take on that company is sort of like a
new smart phone manufacturer wanting to target BlackBerry today.
“It is strange that Amazon would be thinking about TiVo,” noted
nScreen Media’s Dixon.
“There are so many solutions out there already, and most pay-TV
service operators have ways to watch content on mobile devices anyway,” he said, “so I am not sure who Amazon is even targeting right now.”
Perhaps the BlackBerry comparison is apt, as TiVo is no longer just
a retail offering.
“Today TiVo’s significant business is with pay-TV operators, including
in Europe, where there are TiVo boxes that are a premium offering,”
said Parks Associates’ Sappington.
“Today TiVo is almost a software player,” he added, “but another comparison is how
Roku had success as a set-top device but now they are in smart TVs and
other things.”
Risky Business
The DVR market has been a competitive one. While TiVo has
endured, many rivals — including Replay TV and Moxi — have not been as
lucky. Amazon’s attempt to enter this market could be a risky one.
“The devil is really in the details, knowing that Amazon has been
consistently launching products within areas it knows,” noted
Sappington.
“What we know is that it will be related to Fire TV and that it will
have a strong online component, and we must remember that Amazon Video
is already the second largest OTT service, so it makes sense that it
will be part of this DVR,” he suggested.
“Selling Amazon products has been a big part of its business model,
but hardware can be tricky,” remarked Sappington.
Amazon also could follow TiVo’s lead and have success in other markets,
where DVR penetration isn’t as high. However — in the United States, at least —
the risks may not be worth the reward.
“Everyone enters with a splash, but there isn’t news when you leave,” Sappington noted. “In
this case, Amazon doesn’t need a home run to be successful — even a
single is fine. But if it fails, this will be obvious to everyone.”
Peter Suciu has been an ECT News Network reporter since 2012. His areas of focus include cybersecurity, mobile phones, displays, streaming media, pay TV and autonomous vehicles. He has written and edited for numerous publications and websites, including Newsweek, Wired and FoxNews.com.
Email Peter.