Fire TV More Than Just An Entertainment Strategy for Amazon's Daniel Rausch

of TV sets themselves. And our next guest, Daniel Rausch, VP of Entertainment Devices and Services at Amazon, has the very latest on fire TV and what it means for the company. More with him in just a moment. We are back with Daniel Rausch, who oversees the fire TV business at Amazon. Thanks for taking the time today, Daniel, Hey, Andrew, great to be here. Thanks a lot for having me cool. I want to start with you explaining what the fire TV brand entails, because it's a bit like and maybe

I just have Easter on the brain here. It's a bit like the Trinity doctrine with the Father and the Son and the Holy Ghost. It's it's fire TV is a stick, it's a cube, it's its own line of TVs, it powers other TVs. I just want to make sure we get it all straight. So tell us what exactly the brand is all about. That's that's that's a great question, um, and I get that there are many different products to

account for. I think the easiest way to understand fire TV is really think about what we're trying to do for customers. It's it's about delivering the fire TV experience, and that's all about making streaming, you know, really straightforward and simple and possible across any screen customers want. And that might be you know, an older TV that you're trying to upgrade. You might use to fire TV stick or a fire TVQ that's a dedicated streaming media device.

And that's how we started the business. As you said, you know, I think about eight years ago, and you know, more recently, we take that same content experience, that platform that helps us stream and put it into our partner TVs and those are names like Tcttle and High Sense and other sort of household familiars. And we've also most recently launched our own lineup of Amazon built TVs so

we can invent even faster. So I think for customers, what really matters is they can get access to that fire TV experience all the way from a you know, twenty nine dollars sticks say, if they're looking to upgrade you know, the TV in the den, or they can you know, grab one of our new Omnique laed TVs for the very best of the fire TV experience. But what I also want people to understand is how important a business this is to Amazon and just what a

big business this is in general. Because you're talking about sort of like the central nervous system for TVs which allows you to be in a position to drive advertising revenue, You're collecting user data. How important is it, How valuable is it to sort of be the brain of the TV experience? From a business perspective, Well, I think you know again, I think the way we think about the business is really just rooting it in how successful we

can be for customers. That is how we think about any of our businesses at Amazon, and we are humbled with that success. We recently crossed the point with our most recent announcements. We talked about crossing two hundred million device sales, and that's a big global business. We sell fire TV in over eighty countries, worldwide, and so I think, you know, we're making a meaningful impact bringing streaming to living rooms and elsewhere in the house for customers globally.

We're humbled with that success again and we'll just keep growing from there. And that device count I assume means fire TV not just Amazon's own sets, but the other OEMs and the sticks, the cubes all together, that's two hundred million. That's right. Yeah, that's right, so across that full surface area. But to give you a sense of, you know, where the growth the engines of growth, I guess TV's most recently became the fastest growing part of

the fire TV portfolio overall. So you know, we're seeing customers buy or streaming media player products. They love the sticks, you know, the cube is a beloved products you can speak to from across the room. Customers love that. But TVs are now the fastest growing part of the fire TV portfolio overall, whether that's products that we're building with partners like TCL, High Sense, Shall Meet others, or the

Amazon built TVs, which we most recently updated the product lineup. Now, to some degree, the stats that you're putting out there don't strike me as surprising. Considering and correct me if

I'm wrong. But even when you look beyond Amazon other brands in this space, and there are a lot of big companies in this space, the dongles, to use my favorite word of the world, the dicks, the cubes, whatever form factors that seems to have served in the past several years, those seems to be going out of style. And it is sort of the embedded experience, whether it's your own brand or somewhere else, is that that's really

where the streaming TV business is going. Correct, Well, I think you know, customers want they always want a simpler experience, and you know, no one wants a you know, a TV that has tons of different things attached to it to get the experience they want. The good news about fire TV product line is again we haven't a way to upgrade that old TV simply with a stick or a cube or to get the OS you know, directly embedded out of the box. There's incredible staying power in

the streaming media player part of the business. And I think that's because if you have a TV that you know, you still you're fine with the picture quality of it's fine, You're fine on the brightness and you just want it to be a better actually smart TV. There's a great fire TV option for you, and so there's you know, if you ask me five years ago where I thought the streaming media player business would be, I would not think it is as resilient as it actually is today

with customers updating their TVs. Sure, and you know, you're also, as I mentioned, you're in a pretty crowded space with some big players. And so when you throw a number out there, like two hundred million devices, I'm curious how that translates to something like market share because as big as the fire TV business is, I've seen data recently suggesting that your share is moving up. But in the US this is still a Roku dominated business. Overseas, it's

still an Android or Google dominated business. So how are you doing in terms of advancing in terms of market share? Well, if you look at if you look at how we think about the business, we're just trying to be successful for customers. But we are the world's most popular streaming media player. You know, I was for the Product News.

I'm sure we'll end up talking about here shortly. I was in London, and you know, we were talking about expansions to Europe, where the most popular streaming media player in the UK and in Germany, which were the two countries that were focused on our announcements. So I think if you look across the globe, Japan is certainly a place for the most popular streaming media player. I think it's something where you have to piece together how customers

are accessing their content. And Fire TV, having sold two hundred million devices is certainly, you know, one of the most important streaming media players that there is, got it. So with your latest announcement, as you mentioned, we're at two hundred million, there's been an international expansion and also there's now new iterations of the Fire branded TVs, including a new more affordable line of those TVs. So talk to me about this evolution here in terms of the

TV piece of this business. Yeah, So with our Amazon built TVs, we recently expanded the lineup of our omni q led TVs and that's really just about resetting customers expectations for what TVs should be able to do. Your

TV is off over twenty hours a day. It's probably also the biggest technology investment you make in your home is the one or more TVs that you have when you add up the math in terms of sort of smart devices that should be actually smart in your home, and our Omnique LED TVs are all about being actually smart, useful and beautiful for you all throughout the day. We had those in sixty five and seventy five inch models. We extended the lineup so that customers can get those

into more places in their home. That was the first bit of product news. It's sort of our very best TVs and expanding that lineup. The second part of the product news and our TVs was extending on the value end, So we actually released a new series of TVs, the two series, that's all about bringing that great, high quality fire TV streaming experience to new price points and new sizes.

Those started just one hundred and ninety nine dollars, So now we have this sort of range of prices and size options thirty two inch TV all the way up to a seventy five inch Omnique LED, so a full range of Amazon Built TV options for any customer in any home. And then I think lastly we expanded that the footprint of the Amazon Built TV business, so we added you know, we've been selling those in the US

and Canada. We're now selling those in Mexico, the UK, and Germany as well, bringing those to those customer bases that have been anticipating this for some time. Why be in the Amazon built TV business at all? I know you've been there, i'd say at least a year now, and I'm just curious. You know, you certainly seem to have had many partners of existing original equipment manufacturers. Why could that not have just continued to have been the Amazon TV business? Why be there with your own brand

building it yourself. That's a great question, I think, you know, really it's just to be an engine for invention. We want to you know, develop technology as fast as possible. We'd give it to partners as fast as we're in venting it. And there are a lot of examples of where we're accelerating our partner's ability to deliver new experiences. So I think if you look at, for example, we

launched our first Barfield televisions. By that, I mean it's a TV you can just ask Alexa to do anything on from across the room, sort of imagine, you know, putting an echo right in the TV. That's a very complex problem, involves a lot of science and computer science to figure out how to noise, cancel, and beam form and actually build a far field television's a pretty complex

engineering problem. Within a few months of when we launched our first farfield TV, Toshiba was already shipping their own high quality TVs. So and that's because we're inventing it and giving it to those partners as fast as possible. So I think a lot of what you see us doing with the Amazon built TVs is delivering a great customer experience, accelerating our partner set as well right alongside that, and I could certainly see the appeal of an Alexa

driven TV experience. And I'm curious what it means when you think about what Amazon brings to the table, all the different pieces of its business, the ring business. You know, you start to think of a TV as more than just a place for entertainment, but is the hub for controlling the whole smart home? Is that what this TV

is about? Is or the future of this TV? Yeah, I think you know, we've said we've had this term smart TV for so long, and really all that it ever got to for customers with sort of a TV that connects to the internet has a socio user interface, not really organizing your content for you, and that came to sort of set customers expectations for a smart TV.

We're in the golden age of the smart home. We're surrounded by different devices that help us in different ways make life simpler around the home, and the TV's an opportunity to bring all of that together better for customers, not just on the content side. Our mission with Fire TV on the content side is to get content out of the apps, get it in front of customers. You don't have to think about diving in and out of

which app has what for you. You're delighted by recommendations across all your sources, etc. Well, the same should be true for the smart home. Your TV as this big technology investment, it should be helpful throughout the day. For example, you should be able to see your calendar on it. Why wouldn't you get suggestions about new content, recommendations or even recipes from your TV. Also, it should beautiful for you throughout the day. So Omnique lads come with seventeen

hundred pieces of gallery quality art. It's basically an art gallery in your home. So we think that's what actually smart looks like. It's a TV that's beautiful, it's useful, and it's pulling together the world of the smart home around your home for you. The art piece of it sound particularly interesting because I believe you guys have some functionality where you could actually sort of create your own

art just by speaking to Alexa. That's right. I did sort of when we did this set of product announcements, and we did do a sneak peak of Generative AI functionality that we will be launching later this year for customers. So that the classic piece that I did there was showing how the northern lights could be generated over Big Ben. So it was as simple as saying, Alexa, create a painting of the northern lights over Big Ben. Then you could get this beautiful, high high quality render of that

that looks photographic. You can change the style, say to something like van Go style or Pointillism or a graphical style. And so we're going to be really excited to launch something I think so useful for customers. There's a lot of interesting discussion about generative AI and what it can do in a browser, say, but bringing it, I think into customers living rooms and letting them take control of

that creative process is going to be really fun. That does sound really cool, But when we're talking about something that's a little more utilitarian in terms of this smart home functionality, you know, what does this future look like? Am I control? You know, I'm controlling the lights, I'm opening my garage? I mean is it? How ambitious are we thinking here? Yeah? You can do many of these

things with your TV today. So if you ask fire TV, it could be a stick, it could be a new omnique lid to show you your smart home devices, or your smart home dashboard. Up it comes, and there are many ways that that's really useful for customers and some of the things you talked about blinds and lights and the other kinds of things that customers are bringing into their homes. All that's available, but it really gets useful

when you think about things like cameras. So you know my ring cameras, they pop right up as soon as you ask for that dashboard. Or you know when someone rings my ring doorbell during a movie, it just pauses, the movie, brings up the ring doorbell feed and we talk to whoever's at the door. It's usually for the pizza delivery for family movie night. We have them leave

the pizzas and pop upstairs and continue our movie. So I think what customers really want is all of that to come together simply and elegantly and not seem like it's a more complicated world. They want the smart home to be simple and easy to use, and we're glad to be doing that with Alexa and fire TV. We'll be back in just a moment with more with Daniel Rausch,

VP of Entertainment Devices and Services at Amazon. And we're back with Daniel Rausch, who oversees the fire TV business and Amazon also the Luna cloud gaming service, which we will get to in just a minute. But I still want to ask a few more things about fire TV. I'm so interested in this notion of this smart home hub, but part of my skepticism doesn't the smartphone become the more logical place where this hub experience should be emanating from.

Why do we see the TV? As I know this has been you know, I've been covering this business for a while and there's been this fantasy for decades about the TV, But I think that originated before the smartphone was there. So what am I missing? Yeah? I think I think there's some important, important distinctions. The your phone is so useful, and we all, you know, we all rely on it so much. It's also your device, and it's often our most personal device. And customers really don't

actually want a personal remote control for the home. You know, my family, I've got three kids and my wife and we all live together here. We all need access to our smart locks. We all want to be able to bring up the cameras, we all want to turn on and off the lights right. And there are so many homes for which customers are trying to coordinate all that through a person's phone with a account. It gets very complicated.

Actually have to fish out your phone, unlock it, find the right app among all the different apps, find the right device within the app, app the device. And that's just to turn on a light bulb. So I think what customers love is the simplicity of voice. You know, Alexa's incredibly popular in the smart home. The deep integration of Alexa with br TV makes it possible to pick off your movie night routine, adjust the lights, and brings up your content and just gets everything going all at once.

You know, I just mentioned things like the ring doorbell, deep integration, those things are elegant and simple. They're available to everyone in the house. You don't have to learn how to use any of it. So we see customers really using Alexa and fire TV to bring together a

lot of that smartphone capability. And what about the Echo, because the Echo being the speaker device that Alexa is typically stored in in a world where we're filled with fire TVs, what do I need an Echo for if alexas in my because I would assume you don't need more than one device with Alexa in your home. Maybe I'm wrong, Yeah, you I mean there are customers that will put an Alexa device into any given room so

that they have access. And we do see that customers in the living room, if they have a far field TV, say they bought one of our new Omnique led TVs with Alexa built in and it has that our field capability where they can just say Alexa and Alexa is always ready to respond. We do see that that that will be the Alexa device for the living room at this point, because that's a great way to access Alexa. And they might put an Echo dot in there on

their bedstand table. My kids have Echo dots in their room that's the device that they that they use there. So I think it's sort of a room by room question. Our job is to have enough selection for customers, so we want to make sure all that's available. Now, when you start talking about all these these speakers and TVs, I wonder about the privacy issue. Obviously that's important to some consumers. What protections did the fire TV device provide

for those who are you know, very security conscious? Sure? I mean, I mean at an Amazon, you know, everything we do has privacy and security built in from the core. That's from the moment we start to conceive of a product. And just like any of our Alexa you know, endpoints or devices, privacies built in foundationally. So there's a switch on the TVs for example, that electronically disconnects the microphones. It's a complete mute and you see with a little

LED indicator that the microphones are off. There are all kinds of settings around, you know, your voice utterances and your data and privacy settings can be accessed in the fireTV menus so that you can toggle any of that on and off simply for customers. So we present, you know, the key things customers want is transparency and then control over how that data works, and all of that's available right in the fire TV menu. Let's get back to the core of the TV experience. In terms of entertainment,

content discovery can be a nightmare. And frankly, I've encountered TVs where the UX isn't necessarily an improvement. So when you've got you know, thousands of different apps and channels, what is it about the fire TVUX that you think solves for this problem? The key thing the customers actually want, They really want two things. First, if they know what they want to watch, they want to be able to

get to it simply, elegantly, and they're in right. I mean, entertainment is all about stepping back, relaxing, enjoying something, stepping out of the rest of your day, and so you know, putting that content right in front of customers, they don't have to think about where it is and how to find it, whether that's through the fire to VUX and things like are continue watching row you just dive right into it, or through voice where you just you don't

have to think about where it is. You just want to watch, you know, the latest episode of Stranger Things Say, or you want to catch up where all watching succession right now with voice you say it, you're in. You don't have to think about the source. The second thing is to be delighted, you know, with discovery, and I think that's an even more complex problem for customers as

streaming sources have gone up. There's so many choices and so having one central sort of recommendation, set of recommendations for customers is key the customers a lot of things like our next up for you row that's not pointing you to a particular application, that's pointing you to a show that we know you'll love based on your preferences, and pulling it all together. So I think getting content out of the apps really is what customers love most

about the fire TV experience. It's not just some app tray like your phone. That's not the future of streaming. The future of streaming is, you know, understanding what you'll be delighted by and putting it in front of you. Let's switch gears to the Luna business, which you over oversee. Did you also oversee a cloud gaming service? That is

how old now? Would you say? It's been in general availability for just over a year and we just expanded the reach of Luna to include the UK, Germany, and Canada, so we're expanding that footprint as well. So it's it's weeks old in those in those regions and just over a year in general availability in the US. And we've seen that this could be a tough business. Google had a similar service called Stadia that has since shuttered. I know a few months ago your game library lost a

sizeable chunk of games. How are you finding this losing a business in in year one? Considering it seems like it can be a challenging space. Well, I think you know, first of all, we know that streaming is going to transform gaming to customers benefit the same way it has so many different media types. So if you just look at you know, look at your music experience now, or your video and TV experience now, I mean, streaming is transformative and so beneficial for customers, and we know that

you know it is going to happen to gaming. Customers should not have to buy, you know, incredibly expensive hardware investments, you know, much more frequently, if you look at the console space, the expectations for customers, you have to upgrade your console, you know, every few years, just keep pace. All of that can be done in the cloud now, and so you know it's going to be a great benefit for customers when streaming takes over the landscape of gaming.

And that's really what we're all about with Luna, is making making streaming gaming really affordable. I think you know you asked about about how how Luna is doing. I think the best sign for how it's doing is the expansion we just announced. As I mentioned, Luna is now available in Canada, the UK, and Germany. It's been available for over a year in the US in general availability, Customers are loving it and we're just excited to keep

growing it. So has there been any sort of strategic changes in direction after one year or your current configuration is where you're you're going in the future with Luna. You know, we've we've we consolidated a few subscriptions. So we started with a couple of things we had. For example, you could add on a retro games subscription. We've folded that into our baseline Luna Plus subscription. So we're trying to make sense of how customers think about different subscriptions

to game libraries, and customers are loving Luna Plus. They're loving the experiences we're building with third parties. We have an Ubisoft Plus game library on there as well, and a third party offering from Jackbox Games. That's that's one thing that's going well with just figuring out the curation of games in the library, and you've seen us tweak that a little bit, I would say. On the other hand, we're making a set of games free every month the

prime customers and customers are really loving that. So I think that's another thing we've learned is that, you know, customers want to be able to experiment, validate. That's you know, this streaming on Luna works great, and then they'll invest maybe in a subscription or adding a game controller. A prime customer can you know you have a fire team in your living room. A prime customer can lean back and be playing within seconds. They can use their phone

as their controller to try out Luna. And there are great titles in there, you know, We've got for example, Rise and Chase. Turbo is available here in a adventure Pals, Yakaza Kawami too. There's some great game titles available in April and then those rotate every month, So I think I think that's the other thing we're learning is just

how much Prime customers benefit from Luna. One last question, Like a lot of big companies these days, particularly in the tech category, Amazon has cut a significant number of jobs recently, and so I'm wondering, how does that affect you in terms of the fire TV business the Luna business. Are you seeing the same level of commitment when you started these businesses or is it becoming a little harder

Perhaps resources could be more constrained, you know. I mean, first of all, it's it's tough anytime we have to say good hide to anyone. Each one of those decisions is really thoughtfully done, and you know you've seen it

across the tech landscape. But I would offer that you know, there's so much investment going on in our devices business overall, we've recalibrated several investments at which I think is the nature of your question, that is the landscape right in how in terms of the macro economy, you know, every part of every business is going through that. But the business is strong and we continue to invest in fire TV, we continue to invest in Luna. You know, those are

both businesses we're talking today because we're expanding. So I think the future is really great. Good to hear we'll have to check in with you this time next year. Get into their progress report. Thank you Daniel for taking your time out today. Thanks so much, Andrew. This has been another episode of Strictly Business. Tune in next week for another helping of scintillating conversation with media movers and shakers, and please make sure you subscribe to the podcast to

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