NEW YORK (TheStreet) -- Move over Apple (AAPL) TV and Google (GOOG) Chromecast. Wednesday, Amazon (AMZN) announced that it is releasing its own streaming media device: Fire TV, for $99 -- shipping starts today. The device, which operates on an Android-based system and supports Netflix (NFLX) as well as Hulu, is going to be a game changer. Why? Because TV is the missing piece of Amazon's puzzle.
Amazon knows how to build an ecosystem. Much like Apple's integration of services across its devices, Amazon has done the same thing. Amazon has its CloudDrive service, a cloud music player called CloudPlayer, a cloud based photo service called CloudDrive Photos and Amazon Prime. And it's secure. Amazon Web services even hosts Netflix. Essentially, Amazon has been positioning itself as a one-stop shop for all your personal and technology needs. Offering its own streaming device is really more of a way to avoid sending loyal customers elsewhere, and Amazon customers are extremely loyal.
Just look at Kindle. "28% of Amazon.com customers own a Kindle Fire, while 21% own a Kindle e-Reader," said Josh Lowitz, partner and co-founder of Consumer Intelligence Research Partners (CIRP). "Interestingly, 9% of Amazon.com customers own both devices, suggesting how well Amazon has done to drive sales of what amounts to a portal to Amazon.com."
More importantly, Amazon Kindle customers spend money.
Lowitz continues, "We estimate that Amazon Kindle device owners spend approximately $1,233 per year, compared to $790 per year for other customers. They do so because Kindle device owners buy over 50% more frequently than other customers."