Three things that need to be in Amazon’s set-top box

If you’re in the consumer ecosystem game, a streaming set-top box is becoming a must-have accessory. Apple has the Apple TV; Microsoft has the Xbox; Google has an embeddable set-top in Google TV. Even Intel is launching a set-top box.

And now, according to BusinessWeek, so too is Amazon. ¬†According to the report, the as-yet unnamed device will launch this fall and will be closely integrated with Amazon’s Prime Instant Video streaming service and its a la carte VOD store. Pricing is unknown at this point, as is the operating system, although a logical assumption would be the same forked version of Android Amazon uses in the Kindle Fire.

Tying it to the Kindle Fire, in fact, is probably very much part of Amazon’s purpose on introducing the device. Although Amazon’s video services are already widely available on set-top boxes, as well as tablets, none of those devices is natively integrated with Amazon’s e-commerce platform and none of those tablets and set-tops communicate with each other on an Amazon-controlled software platform. Just as the Apple TV is an extension of the iTunes platform into the living room (with a few other must-have apps like Netflix garnished on top), expect the Amazon set-top to extend its Kindle ecosystem to the TV.

An Amazon set-top box has the potential to be more than simply a me-too version of Apple TV, however. Unlike Apple TV, which is largely about on-demand content, Amazon has a number of assets that could significantly enhance the linear TV experience if incorporated into a set-top box that worked in conjunction with a tablet.

Here are three features/capabilities that could make Amazon a major player in the living room if implemented:

Advertising/1-Click Ordering: Amazon launched a mobile ad network last year for placing ads on Kindles and other Android-based and Apple devices that can display ads along with Amazon’s familiar “Buy” button, it’s first effort to leverage the immense trove of data it holds on its users’ purchasing history. But it’s ambitions in the ad space are clearly much bigger. The e-retailer has quietly been building a proprietary real-time bidding platform that plugs into exchanges allowing Amazon to target its users anywhere on the web. Extending that hyper-targeting capability to the living room, especially if coupled with a second-screen link (think something analogous to Microsoft’s SmartGlass technology) to support an immediate call-to-action by the advertiser — including immediate purchase via Amazon — could be extremely powerful.

IMDb/Discovery: Last year, Amazon introduced “X-Ray for Movies,” a feature that leverages metadata from IMDb to enable viewers to identify actors in movies on the Kindle Fire HD and call up information about other movies they’ve been in. Last month, it extended X-Ray to TV shows on the Kindle Fire. If that capability could be extended to linear TV via a set-top box, perhaps by marrying X-Ray with Automatic Content Recognition technology, it could enable Amazon to build a powerful discovery/recommendation engine based on what users are currently watching and what additional information they may have browsed on a second screen while watching it.

Cloud DVR/Streaming: Millions of Amazon customers already use its cloud storage service for ebooks, movies and music. Incorporating remote DVR service into a set-top box linked to a user’s existing Amazon Cloud Player account would allow users to keep all of their media, whether purchased, ripped or recorded, in a single cloud locker to which new content can easily and seamlessly be added from Amazon’s MP3 and movie stores. If daisy-chained with a cable or satellite box, a cloud DVR that created discreet copies in individual user accounts could ultimately enable Amazon to offer near real-time streaming of all linear channels just as Aereo is now doing with broadcast channels using individual antennas, or as Dish Network is trying to do with the Hopper With Sling set-top DVR.

I wouldn’t expect all of those capabilities to be built out and available at launch this fall. But as BusinessWeek reported, the set-top project is being run out of Amazon’s Lab126 skunk-works shop, which boasts an all-star line-up of engineering and design talent culled from Cisco, Apple, Vudu, TiVo, and ReplayTV. That suggests the initiative is meant to be more than merely a hobby for Amazon.