Amazon is reportedly planning to broaden the battle in the streaming platform sector with a free, ad-supported video offering for Fire TV devices that would mimic a similar offering from Roku.
According to The Information, Amazon.com Inc. (Nasdaq: AMZN)'s planned curated video service -- to be called Free Drive and developed by Amazon's IMDB subsidiary -- aims to help the company expand consumer adoption of Fire TV, a platform that powers a growing mix of TV-connected streaming boxes and sticks from Amazon and a select number of smart TV models.
Amazon's plan is to offer a mix of older, catalog content backed by advertising, The Information said.
Free Drive would also provide a complement to Amazon's subscription-based Prime Video service. (Amazon has more than 100 million Prime customers globally.)
It would also open another front in a competitive streaming platform battle that pits Amazon's Fire TV against Roku Inc. , Google (Nasdaq: GOOG)'s Android TV and Apple TV (tvOS), as well as smart TV-focused operating systems from Samsung Corp. (Tizen) and LG Electronics Inc. (London: LGLD; Korea: 6657.KS) (webOS). In Q1, Roku led the streaming media player sector with a 37% share, according to Parks Associates .
Amazon's purported move into the free streaming category could spell some trouble for services like Tubi, Crackle and even Walmart-owned VUDU Inc. , which offers a free streaming library of movies and TV shows. But Amazon appears to be taking a bigger shot at Roku.
While device sales are still a significant part of Roku's business, its Platforms unit (advertising, OS licensing and subscription revenue sharing) is the company's fastest-growing segment. On the company's recent earnings call, Roku CEO Anthony Wood said The Roku Channel, which was launched about a year ago, is now a "material contributor" to the company's overall ad sales.
Roku, whose shares were trading down about 3% today, has also been looking to expand The Roku Channel to other platforms, starting with web browsers and Samsung smart TVs running Tizen. (See Roku's Free Streams Go Outside the Box.)
If Amazon pushes ahead with a free streaming service, it won't be the first time that its initiatives have tried to trip up Roku. In April, Amazon and Best Buy inked an exclusive multi-year deal to create and sell a line of Fire TV Edition smart TVs in the US and Canada, which undercut Roku's previous arrangement to build its OS into Best Buy's Insignia-branded connected TVs.
— Jeff Baumgartner, Senior Editor, Light Reading