Amazon, Best Buy Unite on Smart TV Strategy

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Best Buy will be the exclusiveretailer for Amazon’s next generation of Fire TV Edition smart TVs inthe United States and Canada, under a new multiyear partnership the firms announced Wednesday.

Best Buy willcarry more than 10 4K and HD Fire TV Edition models from Insignia andToshiba starting this summer.

The new smart TVs will feature the Fire TV experience built-in,allowing viewers to enjoy live over-the-air TVprogramming as well as streaming content from a variety of sourcesincluding Amazon Prime Video, Netflix, HBO, PlayStation Vue and Hulu.

Fire TV Edition Smart TV

Fire TV Edition Smart TV

The Fire TV Edition smart TVs come with a Voice Remote with Alexa,which allows users to access apps, search for TV shows, play music, adjust TV settings and inputs, and control other smart home devices. The sets can be paired with any Amazon Echo Device.

“Amazon and Best Buy have a long history of working together, andtoday we take our partnership to a new level,” said Amazon CEO Jeff Bezos. “These Fire Edition smart TVs by Insignia and Toshiba deliver beautiful visuals and all the movies and TV shows you love, with anexperience that gets better every day with Alexa.”

Seeing Is Believing

For many, Amazon has become the go-to retailer for everything frombooks to groceries, and consumer electronics areamong its strongest categories. However, TVs are still something many consumerswant to see before making a purchase. It makes sense that Amazon would want products with its Fire TV functionality to be displayed in a large brick-and-mortar retailer such as Best Buy.

“In the case of products like TVs, it is still important to evaluatein person to judge picture quality,” said Paul Gagnon, executivedirector for consumer devices at IHS Markit.

“Many other consumer electronics products are purchased onspecification, but our experience is that consumers in the U.S. stillprefer to evaluate the performance of audio and video products beforepurchasing,” he told the E-Commerce Times.

“This is especially true with bigger TVs,” said Stephen Baker, vicepresident and industry advisor for technology and mobile at The NPDGroup.

“The smaller TVs — those 37 inches and smaller — still sell online, butAmazon certainly recognizes that to get the scale for Fire OS productsthere needs to be a robust in-store experience,” he told theE-Commerce Times.

TV Market Competition

The Best Buy deal allows Amazon to get its products intomore TVs that potential buyers will see on the showroom floors.

“Smart TVs currently account for more than 70 percent of TV sales inNorth America, so it is an important category,” noted IHS’ Gagnon.

Thisisn’t just about smart TVs, though. It is a way to increase visibility for the FireOS brand.

“Proprietary Smart TV platforms for Samsung and LG are stillimportant, but Roku TV has grown significantly in 2017 as athird-party platform, similar to Fire TV,” said Gagnon.

Roku was the No. 2 operating system platform for smart TVs inNorth America in 2017, and no doubt Amazon would like to get apiece of that market.

“To get there, Amazon needs to be on TVs that customers recognize andtrust, and Best Buy’s Insignia and Toshiba fit that well,” remarked NPD’s Baker.

More Cooperation Than Competition

Amazon long has been viewed as a threat to traditional retailers — andthis is certainly true when it comes to consumer electronics — but in thiscase, the mutual benefits overshadow competition.

“Best Buy is now a strong, growing retailer, and while it competes withAmazon it can also be a partner with Amazon,” said Baker.

“In this case, it isn’t about Amazon as the retailer but as thehardware company; so this move has little to do with that normalcompetition, but is really about Amazon hardware needing a broaderplatform in stores as they compete with Roku and other platforms onsmart TVs,” he added.

However, Best Buy’s involvement in helping an online retailer — evenin a hardware partnership — suggests there is more to it.

“What the Amazon/Best Buy partnership tells us is that both thee-commerce and the brick-and-mortar sides of the retail story arefacing different kinds of pressures, and that by working together theybelieve that they are more likely to succeed,” said Elizabeth Lim,senior research analyst at Mergermarket.

“In Amazon’s case, though they’re known these days for disrupting andstriking fear in traditional sectors — for example, in retail as well asin healthcare — they are still in need of increasing their marketshare,” she told the E-Commerce Times.

“For Best Buy, this is about survival, and gaining access to thedominant e-commerce platform,” Lim said.

“Though they’ve tried to build up theirown platform, this really is a case of ‘if you can’t beat them, jointhem,’” she added. “In terms of this Fire Edition smart TV, byincreasing consumers’ access to these kinds of products — they canchoose to buy them in person in Best Buy or online via Amazon –consumers are more likely to be interested in these items and talkabout them in their networks, and all parties appear to win in theend.”

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