Why's Fire TV Won't Overtake the Xbox or PlayStation

For the past several years, the battle for video game console supremacy was a two-sided conflict between Microsoft (NASDAQ: MSFT  ) and Sony (NYSE: SNE  ) . These two titans of video games constantly battle and release new iterations of their Xbox and PlayStation consoles within a few months of each other. Each has developed a large following, with legions of devoted fans.

Even former perennial stalwart Nintendo (NASDAQOTH: NTDOY  ) has become an also-ran in the war for gamers' attention. Despite holding hugely popular franchises such as its Mario and Zelda titles, Nintendo hasn't been able to keep up with the technological supremacy of the Xbox and PlayStation consoles.

It's for these very reasons that the Fire TV, and the first foray into gaming from (NASDAQ: AMZN  ) probably won't make much of a splash. The Fire TV simply isn't likely to match the consumer connection of the Xbox and PlayStation consoles.

The low end has no staying power
The reason why Nintendo got pushed out of the video game war is the reason why the Fire TV won't be able to push itself in. Nintendo's Wii disrupted the video game industry with its advancements in user-control technology. But the Wii's strategy of appealing to casual gamers and family based entertainment did not last. Microsoft's and Sony's commitment to hardcore gamers is what has given their two consoles staying power.

While the Wii pumped out a slew of poorly rated games on a system lacking in visual appeal, the Xbox and PlayStation consistently push the limits of what a video game console can do. Essentially, gamers have proven time and again that they prefer quality over quantity.

Paying up for consoles
With its Fire TV, Amazon risks placing itself on the same path as Nintendo. The Fire TV, from a video game standpoint, is lacking in exclusive titles. There's only one exclusive title released so far, which costs $7 or is free with the purchase of an Amazon Fire TV controller.

Low pricing seems to be the biggest appeal of the Fire TV's video game ambitions. The Fire TV sets you back just $99, but video game enthusiasts have proven time and time again to be willing to pay up for quality. For example, Microsoft's Xbox continues to be hugely popular, despite costing several hundred dollars more than the Amazon Fire TV. Microsoft sold 5.1 million Xbox One consoles in the past six months. As a testament to the staying power of the Xbox brand, Microsoft even sold 4.3 million Xbox 360 consoles in that time frame as well. 

Likewise, Sony announced last month that its PlayStation 4 had eclipsed 7 million devices sold worldwide. A lot of this has to do not just with the PlayStation's technological power, but also its software offerings. PlayStation games are simply more enjoyable and have much more to offer, which is probably why Sony also announced it had sold 20.5 million software copies as of April 13.

The Foolish bottom line
By appealing to casual gamers and families -- as well as under-cutting existing consoles on price -- Amazon is trying to carve out its own piece of the video game industry. But by doing so, Amazon is basically employing the Nintendo strategy. Nintendo did the same thing with its previous iterations of the Wii, and the results speak for themselves.

Amazon's Fire TV is a compelling device that offers a number of valuable services to consumers. But from the perspective of video games, it's not likely to overtake the Xbox or PlayStation any time soon.

The lesson for console developers is that gamers are more than willing to pay up for quality. Offering cheap devices usually amounts to little more than a flash in the pan, which is what the Amazon Fire TV might turn into unless it proves it can compete with the Xbox and PlayStation on gaming experience. Casual gamers might buy the Fire TV due to its novelty, which they did with the Wii as well. But with nothing to inspire customer loyalty, they aren't likely to stick around for very long.

The biggest thing to come out of Silicon Valley in years
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.

Read/Post Comments (2) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2956851, ~/Articles/ArticleHandler.aspx, 8/31/2015 3:05:50 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Bob Ciura

Bob Ciura, MBA, has written for The Motley Fool since 2012. I focus on energy, consumer goods, and technology. I look for growth at a reasonable price, with a particular fondness for market-beating dividend yields.

Today's Market

updated 2 days ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/28/2015 4:00 PM
AMZN $518.01 Down -0.36 -0.07% CAPS Rating: ***
MSFT $43.93 Up +0.03 +0.07%
Microsoft CAPS Rating: ***
NTDOY $24.85 Up +0.07 +0.28%
Nintendo CAPS Rating: **
SNE $25.87 Up +0.01 +0.04%
Sony Corp (ADR) CAPS Rating: **