Amazon Frank Report Sends TiVo Stock Tumbling

Amazon Frank - Amazon Frank Report Sends TiVo Stock Tumbling

Source: Amazon

TiVo (NASDAQ:TIVO) — the company that pioneered the recording of live cable TV shows — peaked at the turn of the century. The company still sells DVRs, including the voice-controlled 4K Bolt, but in the age of streaming video and tech giants, it’s worth a fraction of its 2000 era market cap. Things may get even tougher for TiVo with a report that Amazon (NASDAQ:AMZN) is working on its own DVR, code-named “Frank.”

News of this potential Amazon TiVo competitor was enough to send TIVO stock tumbling on Friday, closing down 4.3%.

Amazon Frank: The Potential TiVo Killer

Bloomberg published a report Friday morning that Amazon is working on a “digital video recorder for the streaming era.” According to Bloomberg’s sources, the device incorporates physical storage and can record live programming from cable TV. That’s essentially a DVR, like a TiVo box. But Amazon Frank would connect wirelessly to Amazon’s Fire TV streamers and would allow users to stream the recorded video to their smartphone, where they could watch it at their convenience.

Frank would put Amazon in direct competition with TiVo and other services like Slingbox.

Bloomberg’s sources say the Amazon TiVo equivalent is being cooked up in the company’s infamous Lab 126 R&D facility. That team has developed key hardware for Amazon, including the Kindle e-reader, Kindle Fire tablets, Fire TV video streamers and the Amazon Echo smart speaker. Lab 126 was also behind the Fire Phone — AMZN’s disastrous attempt at muscling into the smartphone market — so its track record isn’t perfect.

Bloomberg also notes that Amazon hasn’t decided whether to pull the trigger on Frank, so it’s possible the project may never see the light of day.

Still, the news of Amazon Frank was enough to jolt TIVO stock as investors reacted to the possibility of the giant tech company invading TiVo’s market.

Why Would Amazon Want to Take on TiVo?

The question has to be asked: What would be in it for AMZN to release an Amazon TiVo competitor? 

It’s not like consumers are snapping up DVRs these days. The economics of manufacturing boxes in this climate led TiVo itself to drop out of the manufacturing game earlier this year, instead lending its name and software to hardware manufactured by a third party.

For Amazon, it may be as simple as adding yet another component that ties consumers into its goal of being the hub of their smart home. Gizmodo points out that having access to live TV viewing habits could also be a goal. This information could help the company to choose its new original video releases. Advertising data (such as which commercials are skipped by viewers) from the recorded live TV could be useful if it decides to move forward with rumored plans for a free, ad-supported Prime Video service.

With the company’s manufacturing relationships and scale, Amazon Frank could undoubtedly be produced at a very low cost. Naturally, AMZN also has the infrastructure to sell and deliver its TiVo killer to consumers’ doors with an efficiency TiVo can’t hope to match.

ROKU Also Has Cause to Worry

Also mentioned in the Bloomberg report is Roku (NASDAQ:ROKU). Earlier this year, Amazon began offering Fire TV-branded televisions through Best Buy (NYSE:BBY), competing against Roku, which has partnerships with numerous TV manufacturers to incorporate its video software. Bloomberg’s sources say Amazon is looking to add additional television manufacturing partners, to bring integrated Fire TV service to more consumers. ROKU stock was down as much as 3.5% on Friday, ultimately closing down 1.7%. 

Whatever comes of the Amazon Frank and Fire TV integration plans, one thing is clear: AMZN continues to be determined to own your living room. And that is going to mean tough times for smaller players in that space, like TiVo and Roku.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

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