The time is right for Amazon to ‘do a Kindle’ on the TV industry with its own set-top box

Amazon has big ambitions in the TV content business. At the MIPTV conference in Cannes, France recently, I sat through what was basically a half-hour sales pitch to the TV industry from Amazon VP Anthony Bay, extolling the virtues of Amazon Instant Video in the US and its LoveFilm service in Europe. While Bay said nothing particularly newsworthy, it was clear that Amazon was there for one reason – to do the deals it needs to expand its video offering.

We’re still at a very early stage of an intense period of transformation for the TV industry. There’s a rich seam of innovation just waiting to bring more choice and interactivity to our TV viewing. Right now, it’s all just potential though – cord-cutting is yet to take off, and the video content available on smart TVs and via games consoles and set-top boxes like those from Boxee and Roku still plays second fiddle to content available via a conventional TV aerial, satellite dish or cable box, for many.

Bringing the Kindle approach to a new market

So, why doesn’t Amazon launch its own set-top box and ‘do a Kindle’ on the TV industry? When the Kindle launched, ebooks were still a niche commodity. Through a mixture of smart marketing and savvy content deals, Amazon has got itself to a position where it dominates the ebook market and the word ‘Kindle’ is synonymous with dedicated e-reader devices.

Could Amazon do the same with TV? A low-cost set-top box that opens up a wealth of well-known, instantly streaming video content could be a real hit with the company’s brand and marketing power behind it. It’s a competitive market for sure, but I’d argue that there’s a significant pool of people without a games console or smart TV to access streaming video content. Although consumers can purchase a set-top box from the likes of Roku or Boxee, or even a Google TV box, the value proposition for all of these names has never quite clicked with a mainstream market.

When I floated this idea on Twitter earlier, the idea that Amazon could acquire a company like Roku or Boxee was brought up, purely as personal speculation, by Pearson’s SVP of Future Technologies and Partnerships, Juan Lopez-Valcarcel. The more I think about it, the more that Amazon repurposing an existing manufacturer’s hardware, offering it up cheap as a loss leader and making content subscriptions free to Amazon Prime subscribers makes perfect sense.

Roku feels like a good acquisition target too. Sales of its boxes haven’t been spectacular, but it’s mastered the art of a dirt-cheap, useful streaming box. Its 2 XD model can be picked up for just $69.99.

I’m not the first person to suggest this – a quick search reveals that converged media veteran Jeremy Toeman blogged about exactly this idea back in February, and the highly prescient MG Siegler offered up the possibility of an Amazon set-top box back in 2010.

It feels like the 2012 holiday season is the perfect time for Amazon to make its move, getting in with a simple but valuable offering before Apple inevitably comes along and disrupts the market with whatever it has up its sleeve in the TV space once it takes Apple TV out of ‘hobby’ mode, and before other competitors like Google TV really get their act together.

Even if it ends up waiting another six months or a year beyond this Christmas, the idea of Amazon expanding the reach of its video offering via dedicated hardware makes complete sense – but the company could define the market for a mainstream audience if it acts now.