How Amazon Fire TV Works

Let's make one thing known. Amazon Fire TV is not actually a TV; it's just a streaming set-top box. A set-top box hooks up your TV to the Internet so you are able view streaming TV shows, movies and music on a bigger screen of your TV. Apple pionered this confusing trend by calling its set-top box Apple TV, which is actually not a TV.

Amazon Fire TV was unveiled by online retailer Amazon in April 2014 and goes for $99, same price as the Apple TV and Roku 3 set-top boxes. In 2014, just 8 percent of American households owned a set-top box, but Amazon is hinging on increased demand from viewers for streaming entertainment on TVs instead of "small-screen" laptops, tablets and smartphones [source: Wood].

One important thing you need to know before you get an Amazon Fire TV: The device is made to work with modern high-definition digital TVs and not the older, heavier analog ones. The only means to connect Amazon Fire TV to your TV is through an HDMI cable. If your TV doesn't come with an HDMI port, you need to buy a new TV or get a set-top box , compatible with the old-school analog Tv . A good one is the Roku 2 XS.

Another important question to ask before buying Amazon Fire TV is why the world's largest online retailer is building this piece of hardware? The answer is simple: to convince more people to buy TV shows, movies and music through Amazon.com. It's the same reason that Amazon made the Kindle e-reader: to sell more e-books from its huge online catalog.

As we'll explain in a minute, the ideal customer for the Amazon Fire TV is a current subscriber to Amazon Prime, a service that offers unlimited online access to hundreds of streaming TV shows and movies through Amazon.com (and free shipping on many Amazon products) for $99 a year. If you already get most of your streaming content through Amazon Prime, then the Amazon Fire TV is a perfect fit. If not, well ... more on that later.

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