Amazon (AMZN) is the poster child for a company that keeps evolving. Although it started as the world’s largest largest book store, AMZN stock has thrived as the company moved beyond books into e-books, then e-tailing, then even beyond e-tailing altogether into web services and streaming video.
Today, Amazon continued its evolution with the launch of a highly anticipated set-top device that will bring its Prime Instant Video services (and more) to your TV in a simpler way.
That way is Fire TV, a device Amazon says is has three times the power of top competitors with 2 gigabits of RAM and a quad-core processor.
The move is deeper than just a better way to compete with Netflix (NFLX) on streaming video content, or with video hardware makers like Apple (AAPL) with its Apple TV or Google (GOOG) with its Chromecast.
Longtime investors of AMZN stock will know this is Jeff Bezos at his best: forging into a fast-growing area, disrupting old models of business and looking around the next corner to find continued growth for Amazon.com.
Consider the fact that the Kindle Fire TV gadget actually allows you to watch Netflix and Hulu Plus in addition to Prime — giving AMZN stock exposure to the upside of streaming video subscriptions broadly as well as bolstering Amazon’s in-house business.
Pretty shrewd move … and certainly not the only thing AMZN has going on.
AMZN Stock — Big Plans
With more than 20 million households subscribing to Amazon Prime — the premium subscription service that provides expedited shipping and access to streaming video libraries and e-book lending on AMZN devices — there is a built-in audience for Amazon Fire TV.
This alone has the power to shift the market.
Furthermore, AMZN stock recently took a mild hit on fears that an increase from $79 to $99 annually for its premium service would scare off subscribers. I never believed these scare tactics about an Amazon Prime price hike, but this Fire TV launch might help make current subscribers even “stickier.”
And in case you need help with the math, getting 20 million folks to pony up an extra $20 a year is good for $400 million in additional revenue to AMZN stock. That means even if this device does nothing but boost retention, it is a success.
But don’t think Fire TV is all Amazon is working on to grow. Like Netflix, Amazon has dipped its toe into original content with the home-grown Alpha House series.
Also, Amazon has quietly rolled out a locker system that will help customers return merchandise and cut down on shipping costs.
Then there’s Amazon Web Services, which continues to grow at a brisk pace…
Clearly Amazon and CEO Jeff Bezos are not content to rest on their laurels. There’s no guarantee that AMZN stock will see an instant pop thanks to Fire TV, or that the device will ever be a success long-term.
But for investors who have been eagerly buying up AMZN stock on the expectation that it will find new avenues for growth to justify its valuation, this is further confirmation that the company is committed to finding those new revenue streams.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.