Oct 3, 2017
Seattle Innovation Meets Hollywood Tradition
This past week, technology and entertainment news has been largely dominated by Amazon, as they launched six new Echo devices and revealed insight into the final stages of their strategy to move further into movie production and distribution. The device strategy encompasses Alexa integration into nearly every household electronic interface, including a vastly improved, artificial intelligence (AI) driven audio play, deeper Alexa smart home assimilation, a highly competitive 4K HDR streaming video solution, link to traditional home phone service, and two devices with an entirely new form factor, the Echo Spot and Buttons. These may be among the most interesting, as Alexa skill development and consumer usage patterns will shape their uncertain path. Amidst these AI hardware advancements, Amazon also revealed the final components of a strategy to move deeper into Hollywood, leveraging a traditional distribution approach that is ultimately aimed at bolstering the Amazon Prime value proposition. Below are the details and our analysis:
Over the past three years, Amazon has launched numerous Alexa-enabled devices, such as the Dot, Show, and Look; yet their flagship Alexa enabled speaker, Echo, hasn’t received a hardware update since its November 2014 launch. In tech years, which are sort of like dog years, that’s an eternity. But, generation two was finally announced last week and is sporting two form factors, which are both less expensive than the first generation speaker. The new Echo, priced at $99, includes improved microphones to better pick-up voices, a subwoofer and tweeter, Dolby Audio, and new fabric coverings. In addition, Amazon will be selling them in a three-pack for $250, so that users can immediately take advantage of the recently introduced whole-home audio feature available with Alexa-enabled devices, which let you play the same music on multiple speakers. The original Echo design is not entirely going away; it's being reused in the $149 Echo Plus, a smart speaker that also has a built-in smart home hub that can link to Zigbee smart home devices, such as Philips Hue lights. This means you no longer have to use Amazon Skills or apps to connect things to your Echo. The Echo Plus will come with a Philips Hue bulb, in an effort to demonstrate to consumers that this is the optimal choice for smart home integration.
Echo’s no longer just about audio devices. Amazon introduced screens earlier this year with the launch of the Echo Show, and last week continued down this path by introducing two new video-focused devices to the mix. The Echo Spot, which is an entirely new form factor, and the Fire TV with 4K HDR support. The Spot is pretty nifty, think alarm clock with a 2.5-inch screen that can make video calls…hmmm. The functionality is quite similar to that of the Echo Show, bringing voice and home automation control to more screens and locations in the home. The big question here revolves around the front-facing camera. In a world where many put sticky notes over their laptop camera in fear of spying, how many consumers will embrace that feature in their bedroom or other household locations?
This launch was not just about adding Amazon screens to the home, but also connecting TVs that are already installed. Following the success of the Fire TV product line, Amazon added a 4K, HDR-capable Fire TV with 2160p resolution at 60 frames per second. It has Dolby Atmos integration and an Alexa voice remote. At $69.99 it’s far more affordable than the rival Apple TV 4K, which starts at $179, and priced in line with the $69 4K-capable Chromecast Ultra. It’s the form factor that is quite interesting, not a streaming stick and not quite a set-top-box, rather a mid-size dongle that connects to your TVs HDMI port. And for an extra $10 you get an Amazon Dot, suggesting this is as much about bringing Alexa to the TV, as it is fostering full home integration.
The home phone is back
Echo Connect, a $35 box that plugs into your landline jack, turns your home phone into an Alexa-controlled speakerphone. It syncs your contacts and bridges your phone calls to an Alexa-enabled speaker, enabling hands-free calling using your home phone. Adding phone integration essentially bridges Alexa to every facet of your home life. While most of the country already has these features through their smartphone, Amazon is banking on there being a segment of the population that wants to keep their landline number, and also sees the appeal of Alexa integration.
Let’s file this one under, why not see where it goes – Echo Buttons. They are the first of many Alexa Gadgets to come, a new way for consumers to play games with friends and family through compatible Echo devices. These buttons illuminate and can be pressed to trigger a variety of game play experiences, powered by Alexa. These devices liken back to the Simon Electronic Memory Game from the 80s; what was once old is new again.
Amidst the glory of a whole new product line, Google pulled YouTube support for the Echo Show, limiting one of its core features. Amazon announced last week that its Echo Show devices could no longer play videos from YouTube because the site’s parent, Google, stopped supporting the service. Google’s response is that Amazon’s implementation of YouTube on the Echo Show violates the terms of service, creating a broken user experience.
In contrast to the innovative Echo family of devices, Amazon’s expansion into Hollywood is as old school as it gets. There’s no contention with exhibitors about release windows and no intention to forgo a theatrical release, like Netflix does with their movies. In fact, Amazon is embracing the tried-and-true Hollywood distribution model to generate buzz and credibility for films that will eventually land on Amazon Prime. Starting with Woody Allen’s “Wonder Wheel” in December, Amazon will begin distributing its own films and overseeing all parts of their theatrical campaigns. Amazon is taking a more traditional Hollywood approach, focusing on art house mid-range budget films, while offering directors the creative flexibility they need. Think of this move further into content creation and distribution as a vehicle to propel Prime’s brand image, consumer value proposition, and ultimately grow the subscriber base.