Why Amazon’s Fire TV Didn’t Burn Netflix, Apple Investors

Amazon unveiled Fire TV Wednesday with the promise that the thin set-top box would revolutionize entertainment in the same way the Kindle changed reading habits. But investor excitement for the device, speculated about for weeks, was quickly extinguished.

$AMZN Fire TV announcement = market shrug.

— Anne (@abubnic) Apr. 2 at 01:13 PM

Amazon’s stock climbed just a quarter of a percent by 2p.m., nearly two hours after the company concluded its news conference. Some cashtaggers said the lack of enthusiasm was a bearish sign for the stock, which trades at $343.86 and is down nearly 14% since the start of 2014.

$AMZN On a day this should have rocketed this goes no where. . . Hello 330.

— Roses_Wilted (@Roses_Wilted) Apr. 2 at 12:58 PM

Fire TV reminds many of Apple’s, $AAPL, set top box. Like Apple TV, the device costs $99. It is available for order now on Amazon.com. Also like Apple TV, it offers to display photos on the television screen and stream Netflix, $NFLX, and other subscription content in HD—providing users have a subscription.

Apple TV, of course, never really took off, despite rave reviews from owners. That’s one reason why Amazon investors might be withholding oxygen for Fire TV.

Amazon insists its device is better than competing offerings. It has 3X the processing power and 4X the memory of Apple TV, Chromecast or Roku 3, according to Amazon’s press release. Amazon promises that the extra power and memory will allow its content to start ASAP. Waiting for content to load has been a pain point for Netflix subscribers, although one that should be alleviated somewhat by Netflix’s recent deal to pay Comcast, $CMCSA, for a direct connection to the cable giant’s broadband network.

At first blush, it doesn’t appear that Amazon’s set-top box is really battling Netflix, since it will play Netflix content for subscribers. Netflix shares fell a little less than 1% after the announcement—far less than many investors had expected.

$AMZN So it appears this media event had no effect on either stock..what a non-event $nflx

— Kevin Ojunta (@darotweiler) Apr. 2 at 12:42 PM

The fact that Netflix fell at all is likely attributable to compatibility fears. Some investors are concerned that Amazon’s box will work seamlessly with Amazon Prime, making that $99 service more attractive to owners than Netflix. Amazon’s original series, available to Prime subscribers, and its deal to exclusively stream Fox’s hit series 24 are already taking aim at Netflix’s subscribers.

Apple’s stock, for its part, showed no reaction to Amazon’s blockbuster news. Shares were flat by 2 p.m.

Some investors say the set-top box market is over-saturated. Amazon’s Fire TV not only has to compete with Apple TV, Chromecast and Roku, but also with smart televisions that have direct Internet connections and game consoles such as the Wii, PS3 and Microsoft’s xBox 360, $MSFT, which all play streaming video services on the TV.

$AMZN Poor Ouya is going to need to step it up. Still sticking with my Chromecast anyway. Over-saturated set top box add-on market for sure.

— Tim Phillips (@kayak83) Apr. 2 at 12:53 PM

One thing is certain, investors don’t think Amazon’s Fire TV will ignite the set-top market anytime soon.

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