Market Watch

Amazon's PushButton Acquisition Positions it for Wider Device Integration

August 16, 2011

Laura Aguilera Laura Aguilera Senior Research Analyst, Service Providers & Platforms
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Amazon has acquired PushButton - a UK-based developer of interactive television services from traditional red button services to applications for connected TV sets. Financial terms of the deal terms were not disclosed.

PushButton built apps for European-based streaming player LoveFilm, which Amazon acquired earlier this year. Those apps were used by LoveFilm to reach consumers on the Sony PlayStation 3, Sony Bravia TVs and Samsung Smart TVs. Other clients include Foxtel, Sky, ITV, Virgin Media National Geographic and the BBC.

PushButton is a member of the advisory group for the UK's digital terrestrial TV (DTT) platform, Freeview.

Analysis
With Netflix now widely tipped to arrive in the UK and Spain early in 2012, the timing of Amazon's purchase of PushButton makes the acquisition look like a response to this growing competitive threat. Seeking to control more of LoveFilm's streaming ecosystem in-house makes sense for more than purely defensive reasons because it should allow Amazon to shape LoveFilm's connected device user experience more effectively. This matters because connected devices are a key component of any successful paid-for online video service, and LoveFilm currently lags someway behind the 'over 200' supported devices currently claimed on Netflix's website.

Amazon knows this. Consequently the PushButton acquisition must be seen as indicative of what Amazon has planned for the future: it's a move designed to position itself to compete with Netflix by building apps that will connect its service with a wider audience. In this context PushButton's involvement with Freeview may prove to be a useful arrow in the quiver for the UK market (although it is less likely to apply to other regions were LoveFilm operates, like Germany). Longer term, of course, there is also the potential for these applications and expertise to find their way back across the Atlantic to bolster Amazon's US video offers.

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