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Amazon Fire TV Is No Xbox Killer

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Amazon made an interesting entry into gaming, but its impact will be limited.

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Hooray! I just ordered my Amazon.com (NASDAQ:AMZN) Fire TV (stay tuned for a review!), which means my Apple (NASDAQ:AAPL) TV is about to start feeling jealous.

As far as my personal use goes, I'm excited about the voice search feature. Using my Apple TV remote or iPhone to search Netflix (NASDAQ:NFLX) is way too tedious.

But from a business and investing standpoint, I'm really interested in the Fire TV's optional game controller, which turns it into a console capable of playing Google (NASDAQ:GOOG) Android games.

So is Amazon about to disrupt the gaming industry?

I doubt it.

I don't view Fire TV as competition for the Sony (NYSE:SNE) PlayStation 4 and the Microsoft (NASDAQ:MSFT) Xbox One. It just doesn't have the breadth of hardcore titles the serious consoles offer, and it won't have the big Sony and Microsoft exclusives.

But what if we look at what's happened in mobile gaming and digital photography?

Demand for traditional gaming handhelds and digital cameras is diminishing. And one reason consumers see no need to buy specialty devices is because smartphones and tablets are basically good enough at most things.

So if people are open to all-in-ones in mobile, why wouldn't they think the same way at home?

And from a technology standpoint, semiconductor companies are making ever-greater advancements in graphical processing power, and that means the technological gap with "real' consoles will get smaller over time.

That's all well and good, but consoles have a very important structural advantage.

Software makers can still make a ton of money on a hit $60 console game. They'll be in no hurry to use development resources to adapt lucrative hard-core titles for new platforms focused on moving $1.99 games. In its marketing, Amazon is quoting an average Fire TV game price of just $1.85.

When Activision (NASDAQ:ATVI) makes a Call of Duty game for Fire TV or Apple TV that offers, say, 85% of the console experience at a hugely discounted price, things will have changed.

Remember, the casual gamers that latched onto Nintendo (OTCMKTS:NTDOY) and Guitar Hero back in 2006-2008 have already left the building.

The serious gamers that remain will really need to be wowed to abandon their Playstations and Xboxes, and the Fire TV is not the machine to do that.

Twitter: @MichaelComeau

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Position in AAPL
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