Amazon announced this morning that it has over 40 million active Fire TV users globally, up from over 37 million that it reported in early September, 2019. The 3 million or so gain would represent monthly growth of around 750K Fire TV users. Amazon said there will be 150+ Fire TV edition models in 10+ countries by the end of 2020. Fire TVs include sticks, boxes, smart TVs, sound bars, auto screens and devices for pay-TV operators.

By Amazon’s count, Fire TV was already the top connected TV (CTV) provider globally in Q3 ’19, and its lead over Roku will likely expand just a bit for year-end 2019. Roku will report Q4 ’19 results on February 19th. At the end of Q3 '19 Roku reported 32.3 million active user accounts. In Q4 ’18 Roku added 3.3 million active user accounts, which would mean even if Roku doubled its quarterly growth in Q4 ’19 (which is unlikely), it would still be shy of Fire TV’s total.

Amazon was extremely aggressively with Fire TV pricing during the recent holidays, slashing the price of the Fire TV stick to $15 (down from $40 regular) and the Fire TV stick with 4K to $25 (down from $50). There were also numerous deals bundling Fire TV sticks with other Amazon devices like Echo for further discounts. Amazon said in its holiday recap press release that it hit record sales, with “tens of millions” of its devices sold.

Of course Amazon doesn’t break out Fire TV’s gross margins, but it’s likely the holiday promotions reduced them to low single digits, or possibly close to just break even. As a reference point, in Q4 ’18, Roku reported gross margin on its Player business (which includes its devices) of just 2.4%. When Roku reports Q4 ’19 results, Player gross margin will be a key number to keep an eye on, and it will indicate how much impact Amazon’s Fire TV price promotions (which Roku matched) had. Note Roku also announced a spate of new partnerships today.

But whether Fire TV’s gross margin is 3%, 1%, break-even or potentially negative is beside the point. What IS important is that Fire TV is reaching the kind of scale where it can meaningfully make Jeff Bezos’s famous “flywheel” spin even faster. The flywheel refers to how video (which is included in Prime) helps drive more Prime members, who in turn spend more money shopping on Amazon. The flywheel effect has been the primary reason Amazon has continued to increase its investment in video.

More active Fire TV users will lead to more CTV viewing and Prime video viewing, which are generally good for Prime and the flywheel. But the flywheel moves into overdrive because as more video is consumed specifically in Fire TV Amazon can measure viewers’ behavior, and then use that data to sell/serve ads that are ever more effective into an ever-expanding inventory pool. Roku has already thoroughly proven how effectively a device-maker can monetize its share of ad inventory.

But Amazon brings the added benefits of using its own first-party shopper data for improved targeting and attribution, not to mention one-click purchase and fulfillment. And Amazon can tweak its ad rates depending on where it prefers to show profitability in any given quarter - in its ad business or in its e-commerce business or both.

In other words, Fire TV enables Amazon to offer advertisers full funnel, ROI-driven inventory. In 2020 as more ad-supported OTT viewing happens through CTVs, Fire TV will achieve the kind of scale that can help even the biggest brands move their sales needle. And don’t forget, Amazon has been steadily building out its portfolio of private label products across numerous categories. Amazon’s executives in charge of these products will likely be the first to aggressively use Fire TV’s growing CTV ad inventory.

Depending on how successful the ad model proves to be, it’s not hard to image Amazon literally giving away Fire TV sticks to Prime members (or a subset of them) later this year to help drive viewership, ad inventory, private label product sales, etc. After all, Amazon is giving Prime members hundreds of millions of dollars of content value by including video for free to feed the e-commerce beast…why not do the same with Fire TV devices too?

CTV advertising is still in its relative infancy, but Fire TV’s growth underscores just how significant a player Amazon is going to be - and how it’s going to reshape brand advertisers’ expectations, further morphing much of TV advertising into a biddable, performance medium. As I wrote 3+ years ago, Amazon’s video ambitions are limitless and it is covering every base imaginable.

(Note: if you want to learn more, check out our June 11th Connected TV Advertising Summit in NYC)