Amazon hits Apple and Google with streaming sucker punch

The fight for the future of TV is getting scrappy, as Amazon stops selling Google Chromecast and Apple TV 'to avoid customer confusion'.

by Adam Gale
Last Updated: 02 Oct 2015

Forget quadplay. The fiercest battle for the TV market is arguably being fought between US tech companies, not European telcos. The Silicon Valley and Seattle giants have zeroed in on streaming as the future, and have been investing heavily into that market over the last few years (Facebook, distracted perhaps by dreams of virtual reality, is a notable exception).

The competition got that bit more fiercer yesterday, when Amazon announced that by the end of the month it will stop selling set-top boxes that are incompatible with its Amazon Instant Video streaming service, which features external and original content such as Jeremy Clarkson's new and very expensive un-Top Gear. This is fine for Sony’s Playstation and Microsoft’s Xbox, but not so good for Apple TV and Google Chromecast.

‘Over the last three years, Prime Video has become an important part of Prime. It’s important that the streaming media players we sell interact well with Prime Video in order to avoid customer confusion,’ an Amazon spokesperson said.

That sounds pretty reasonable. Except that the reason Chromecast and Apple TV don’t have Amazon instant video apps is because Amazon hasn’t released them for those devices. The same applies for set-top boxes made by any manufacturer other than Amazon’s pal Sony that use Google’s Android TV streaming service. ‘Confusion’? Read ‘market share’.

But I was here first

The battle for the TV streaming market is really part of a broader tech war. New technology has broken down the barriers between sectors – you can now watch TV, listen to music, play games, read books, make calls or do work on phones, tablets, computers and television sets.

Each of the tech giants is coming at this emerging mega-market from a different starting point, with opportunities to expand into new spaces and risks of losing the ones they've already cornered. On the hardware side, Microsoft and Sony have introduced streaming and apps to their gaming platforms, while Apple came out with its set top box for TV but has added a gaming element.

On the software side, Google and Amazon are trying to provide a video service (Amazon Instant Video and Android TV/YouTube) and the hardware to go with it (various Amazon Fire devices and Google Chromecast). Then there are streamers like Netflix and Spotify and hardware providers like Roku that operate in only one area.

Amazon’s strategy is to exploit the power of the bundle. Its video and music services are included with Prime membership, which also offers cheap, quick delivery and other perks. Amazon boss Jeff Bezos has been betting for ten years that value for money would draw more and more of his customers to Prime, which has a flat rate of £79 in the UK.

Why, the reasoning goes, would you want to pay separately for music streaming, video streaming and delivery on your online shopping, when you could get the whole lot in a cheaper (and loss-leading) all-inclusive membership offer?  

Making it harder or indeed impossible to buy rival products on Amazon is consistent with that strategy. Amazon wants to convert regular users to Prime members and it will do what it takes to make that happen. (Bezos is cagey about how many people have actually signed up, saying only that it’s in the ‘tens of millions’ and growing rapidly.)   

The danger, though, is that this clashes with the feature that has driven Amazon’s phenomenal growth to date – its ability to be the world’s online shopping emporium. People who aren’t Prime members go to Amazon when they want to buy something online because they know it be cheap, because they know it will be quick and above all because they know it will be there. If users lose faith that Amazon stocks every product they want, they might start looking for other places to shop.

Google would love it if people just typed what they wanted into its search bar and bypassed third-party shopping sites altogether. The European Commission might have a different opinion on the matter, but that’s by the by.

Interestingly, Google’s strategy has been much the same, in its own way. Arguably, the only reason Amazon instant video isn’t consistent with Chromecast is because Google refuses to release numerous apps for Amazon’s Android-powered Fire smartphones and tablets, which is itself because Amazon doesn’t prioritise Google Play on the devices. That is, this could just be tit for tat.

It’s impossible to know who will win the streaming war. It’s a competitive space. Hardware giant Samsung recently ditched its Milk video streaming service after it failed to gain the necessary traction. It would be highly unsurprising, though, to find Amazon, Google and Apple the last three standing.

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