Is Amazon Eyeing DVR in the Streaming Video Market?

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3Q 2018 | IN-5258

The streaming media player maker Amazon is said to be developing a new device named Frank—a type of living room hub. According to sources, wireless technology used in Amazon’s Echo speakers will be integrated into Frank to enable connectivity with Fire TV boxes. The device will also include physical storage for recording live TV that can be streamed to smartphones and other devices for viewing at a later time. Any further details on the features, launch date, or pricing of Frank is yet to be known; however, the rumored device may be Amazon’s next attempt to dominate the home entertainment market. Amazon has been providing streaming video services similar to Netflix to its Amazon Prime members. It also provides streaming video adapters, including Fire TV devices and its newest product, the Fire TV Cube, which works as an entertainment hub to control compatible TVs, sound bars, and other multimedia devices. No Amazon Fire TV streaming device supports internal storage for Digital Video Recording (DVR) application as of now.

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Amazon Reportedly Developing a DVR Device

NEWS


The streaming media player maker Amazon is said to be developing a new device named Frank—a type of living room hub. According to sources, wireless technology used in Amazon’s Echo speakers will be integrated into Frank to enable connectivity with Fire TV boxes. The device will also include physical storage for recording live TV that can be streamed to smartphones and other devices for viewing at a later time. Any further details on the features, launch date, or pricing of Frank is yet to be known; however, the rumored device may be Amazon’s next attempt to dominate the home entertainment market. Amazon has been providing streaming video services similar to Netflix to its Amazon Prime members. It also provides streaming video adapters, including Fire TV devices and its newest product, the Fire TV Cube, which works as an entertainment hub to control compatible TVs, sound bars, and other multimedia devices. No Amazon Fire TV streaming device supports internal storage for Digital Video Recording (DVR) application as of now.

Amazon in Home Entertainment Market

IMPACT


Amazon is one of the key streaming media adapter makers in the global market. Google’s Chromecast is the largest streaming media adapter maker with 28% of the market. Apple, which sells high-end models costing around US$200—with choices between 16 Gigabytes (GB) and 32 GB of storage—holds the second largest market share of 18%, followed by Roku and then Amazon.

Amazon has been providing a range of streaming devices, from their US$39.99 Fire TV sticks and mid-level models supporting ultra–High Definition (HD) standard, to the high-end Fire TV Cube that supports media hub function with hands-free Alexa voice control. Toshiba TVs, which have a built-in Fire TV interface and streaming video service for its Prime members, are another Amazon product in the home entertainment system. In the Over-the-Top (OTT) streaming video space, Amazon’s service is believed to have the second largest customer base in North America after Netflix. Competition in the OTT market is accelerating as traditional pay TV service providers join the streaming video market by introducing Virtual Multichannel Video Programming Distributor (vMVPD) services such as Sling TV or DirecTV Now. Other streaming video service providers such as Hulu and YouTube have joined vMVPD services by adding Live TV streaming services. In early 2018, Amazon added Live TV to its streaming services in order to stay competitive among other OTT players.

Live TV Streaming Services to Drive DVR Demand 

RECOMMENDATIONS


Since the majority of the streaming market is dominated by subscription video-on-demand services like Netflix, DVR features are not as necessary. When streaming live channels, however, the ability to capture live shows for play back at a later time can be a differentiating feature among competitors. High consumer demand for DVR services in traditional pay TV services indicates that Live TV streaming services need to support some form of DVR capability. vMVPD services such as DirecTV Now, Dish Networks’ Sling TV, or Hulu Live have initiated cloud DVR services to address DVR demand.  

Cloud DVR capabilities by live-streaming services can be offered free of charge but with a limited storage space, usually allowing extra storage of 20 to 30 hours of content with additional fees of US$5 to US$15 per month. Cloud-based DVRs do provide flexibility to users, who can activate or cancel the DVR option depending on their requirement. However, unlike a set-top box DVR, the recorded content would not be stored in the cloud forever. The recorded content will be removed after the allowed period of cloud storage has expired, or the oldest recorded content will be replaced by the newest recorded content when the maximum storage capacity is reached.

Amazon’s idea to add DVR to its new streaming device is targeting Live TV streaming users. If Amazon provides a DVR device that operates in conjunction with Fire TV devices, the local DVR feature will enable users to have better control over content, with the ability to store content for unlimited duration and no extra monthly charge like cloud DVR services. This would make Amazon’s Fire TV devices and its streaming service stay ahead of its rivals. However, the device needs to be priced right since consumers have numerous choices over different services, including cloud DVR options. Despite the uncertainty in the rollout of Amazon’s new DVR device, increasing availability and adoption of Live TV streaming services are expected to drive demand for a DVR feature in OTT video services. Service providers cannot ignore this demand and thus are preparing to include DVR offerings to their streaming services. Development to add DVR features to streaming boxes in partnership with hardware makers will be necessary. A cloud DVR could be the solution to providing DVR features to customers without the need for a hardware upgrade. However, the decision between a physical DVR or a cloud DVR needs to be made to best fit the requirements; for example, issues such as content licensing, cloud DVR storage requirements, and storage demands of streaming video service customers will need to be evaluated properly. In markets where content licensing requires a unique copy of each cloud DVR recording per subscriber, availability of physical storage in the streaming box could be a better solution than the cloud, which needs massive cloud storage investment. However, device makers need to ensure that the hardware’s pricing is attractive to streaming video customers, who want to spend less than the monthly cost of traditional pay TV services. The right choice of DVR technology will give service providers a competitive advantage, improve customer satisfaction, and create revenue-generating opportunities in providing live-streaming services.

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