Amazon Gets Smart About Shaking Up the Connected TV Landscape

Amazon is already one of the dominant players in the connected TV space, with the Fire TV hitting 50 million monthly active users last year and its streaming sticks among the most popular on the market. But the company believes there’s still room to grow, so it’s entering the already crowded smart TV landscape and releasing its Amazon-built Fire TVs this month: the Amazon Fire TV Omni Series and the 4-Series, fully integrated with Alexa. “We believe that ambient intelligence can make your TV smarter, and when we look at so-called smart TVs today, we all know this: They're not very smart,” said Daniel Rausch, Amazon’s vp of entertainment devices and services. “We think that our approach to ambient intelligence can transform the living room and customers' lives for the better overall.” Continued disruption It is also likely to disrupt the thriving connected TV ecosystem. Connected TV ad spend exploded during the pandemic. Prior to Covid-19, it was projected to reach $10.8 billion in 2021 and $12.5 billion by 2022. Now, eMarketer has increased its CTV ad spend estimates to $13 billion-plus in 2021 and $17 billion in 2022—and Amazon has its eye on the biggest possible piece of that rapidly growing pie. From CTV to Smart TV Several connected TV players have branched out from devices to smart TVs: Amazon will manufacture its own smart TVs, but Fire TV also has partnerships with Insignia, Toshiba and now Pioneer.Roku doesn’t manufacture its own TVs but has licensing deals with several manufacturers, including Hisense, Hitachi and TCL.Comcast is reportedly partnering with Hisense on its own line of smart TVs, XClass, which would extend its Xfinity platforms beyond the pay TV footprint. The Amazon Fire TV “could change the way we look at CTV inventory for mid to lower funnels when we can utilize Amazon data, and they could expand their footprint because of those televisions,” said Frank Puma, Mindshare’s investment business lead. Between Amazon’s smart TVs, connected TV devices and apps on other platforms, “they’re hitting it from every touch point of how you access that inventory,” Puma said. “They’re making themselves and their product accessible to consumers at every touch point. That allows them to grab more share and find ways to have higher reach that then will impact the way I split my dollars.” Stay tuned for more Amazon’s move into smart TVs differentiates the company from Roku and Android TV, “which are just licenses and not product operators themselves when it comes to smart TVs,” said Ross Benes, an eMarketer senior TV and video analyst. “There's also TV makers that are also trying to do the reverse of what Amazon's doing: They already make TVs, and now they're trying to license out their software to others.” That includes TV manufacturer LG, which invested approximately $80 million in data and measurement company Alphonso (now LG Ads) in January. Early next year, LG Ads is set to roll out its new operating system, River OS, which will be found on LG-branded televisions in the U.S. as well as numerous OEM (original equipment manufacturer) partners. When we look at so-called smart TVs today, we all know this: They're not very smart.Daniel Rausch, vp of entertainment devices and services, Amazon So far, that company isn’t worried about Amazon’s arrival into the market. “It's not like Amazon hasn't been out there with Fire TV all this time in some format or another,” said John Gee, LG Ads chief business development officer. “The fact that they're going to manufacture their own is going to impact whoever their OEM partners were before. … Whether or not that's going to be the driver for the buyers and the consumers is still left to be seen.” Also still up in the air is whether Amazon’s branded TVs could disrupt agreements in which it licenses its operating system to smart TV makers like Insignia and Toshiba. “I’m curious if those makers will continue to do so now that they have their own TV, or if they view it as a competitive thing now that Amazon is trying to bring things in-house more,” Benes said. “But that will take some time to develop.” For now, Amazon isn’t worrying about ruffling feathers, and is instead focused on striking partnerships with companies like Netflix—whose “Play Something” randomized feature will be integrated with Alexa—and Zoom, which will come to Fire TV this fall in its first partnership with a smart TV manufacturer. “We thought we could do more innovation faster for customers by building that one cohesive product,” Rausch said. “Our goal is to invent more, faster, for customers and then make it available to partners as fast as we invent it.”