Amazon to Launch Internet TV - Analyst Blog

E-Commerce giant Amazon.com, Inc. AMZN plans to launch a video streaming device in April, according to Bloomberg.

Reportedly, Amazon's device will resemble Google's Chromecast in appearance that can be plugged into the HDMI port in televisions to access Internet content in real time via Wi-Fi. The device will run on a modified version of Google's GOOG Android operating system like the Kindle Fire tablets. The device will likely stream Amazon's online video offerings, including Prime Instant Video and on-demand video service, which includes new films and TV shows, and also support online gaming feature.

Though the price is yet to be decided, we expect Amazon's device will be competitively priced within $100. The video streaming device will be available on Amazon.com and through other retailers like Best Buy and Staples.

The e-Commerce giant is dependent on other devices like digital video recorders and Blu-ray players to stream its expanding video content. The new device could help Amazon build its own brand name and broaden its range of hardware products, including tablets, electronic readers and smartphones. Additionally, it will provide access to Amazon's expanding video services, which also include the Amazon Video on Demand store.

Amazon has done exceptionally well in new fields like cloud computing and tablet computers. Despite being a late entrant in the home entertainment market, Amazon is likely to succeed buoyed by its innovative ideas. We believe the company's promotional techniques and strengths will come into play to expand the reach of its streaming devices.

However, competition will be fierce, with most of the large technology companies foraying into similar Internet-based video programming businesses. Amazon will compete with Apple Inc. AAPL, which already sells its own STB called Apple TV and Google's Chromecast that is priced at only $35.

Additionally, Amazon's new device would compete with Roku's new streaming stick priced at $49 and other content streaming devices, including game consoles like Xbox and Playstation. Whether Amazon can edge past other tech giants in the attractive home entertainment market remains a wait-and-see story.

Though Amazon is one of the leading players in an extremely fast-growing market, significant competition from eBay, Google and other online retailers remain a matter of concern. Additionally, Amazon's continuing investments in fulfillment centers could hurt profitability, going forward.

Amazon currently retains a Zacks Rank #4 (Sell). Another stock that has been performing well and is worth considering is Liberty Ventures LVNTA, carrying a Zacks Rank #1 (Strong Buy).