How Amazon Fire TV Works

First, let's clear up some confusion. Amazon Fire TV is not a TV; it's a streaming set-top box. A set-top box connects your TV to the Internet so you can enjoy streaming TV shows, movies and music on the bigger screen of your TV. Apple started the whole confusing trend by naming its set-top box Apple TV, which is also not a TV.

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

One important note before you buy Amazon Fire TV: The device is designed to work with modern high-definition digital TVs, not the older, bulkier analog ones. The only way to connect Amazon Fire TV to your TV is with an HDMI cable. If your TV doesn't have an HDMI port, you either need to buy a new TV or buy a set-top box that's compatible with the old-school analog versions. A good option 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.

Amazon Fire TV works a lot like Apple TV and Roku set-top boxes. The basic idea is simple: Using a remote control, you can make selections from on-screen menus featuring TV shows, movies and apps.

First, you need to set up the Amazon Fire TV. Luckily, this is very easy. When your package arrives from Amazon.com, you'll open it to find a small, square, black, plastic box, a remote control and a power cord. On the back of the box are ports for connecting it to your TV (HDMI) and to your home Internet connection (Ethernet). You have to supply your own cables. Amazon Fire TV is also WiFi-enabled, so you can connect to your home's WiFi network without the Ethernet cable [source: Amazon].

Simply connect the box to your TV using an HDMI cable and the box to your Internet modem using an Ethernet cable. (If you have WiFi, skip the latter step). Then plug in the power cord. There's no power button on the box. If it's plugged in, it's on [source: Amazon].

When you first turn on Amazon Fire TV, a welcome video will walk you through the basic features of the device and then on-screen prompts will help you connect to your WiFi network. If you are an Amazon Prime subscriber, your box will come preloaded with your information, so you can start watching (and buying) movies and shows immediately. Other users will have to input their credit card information and other personal data.

The home button on the remote takes you to the home screen, which shows your recently viewed items; featured movies, TV shows, apps, and games that Amazon thinks you might like; and lists of popular titles like new releases, recently added titles, top movies, and free games. On the left side of the home screen are links to additional menus for movies, TV, apps, games, and content you've already purchased in your video library.

You can navigate through these menus using the circular pad on the remote. To play games on Amazon Fire TV — the box ships with a handful of preloaded titles, including Minecraft — you can either use the remote or buy a separate wireless gaming controller for $40 [source: Amazon].

The niftiest feature of Amazon Fire TV is voice search. To search for a particular movie, TV show, actor or genre, just hold down the microphone button and say the word or phrase. Voice search seems to work great, but the big drawback is that it only produces results from Amazon's own catalog of streaming content. If a TV show or movie isn't available from Amazon, but is available through another streaming service like Netflix or Hulu Plus, it won't show up in the search results [source: Wood].

Amazon Fire TV is in direct competition with existing set-top boxes like Apple TV and Roku. The products are similar in many ways. All three allow you to access free and subscription streaming video services like Netflix, Hulu Plus, Watch ESPN, YouTube, Crackle and Showtime Anytime on your TV. The only truly unique features offered by Amazon Fire TV are voice search and a few gaming titles. Reviewers also note that the Amazon device is faster and smoother than other set-top boxes thanks to its beefed-up processor and memory [source: O'Brien].

As we mentioned earlier, Amazon Fire TV makes perfect sense for existing Amazon Prime subscribers who already watch a lot of streaming content from Amazon's online entertainment library. That's because Amazon's voice search only shows results from Amazon.com. If you prefer to watch streaming video from a wider variety of sources — Netflix and Hulu Plus, for example — then you have to load each of those apps individually and search within them for movies or shows. That's a potential con for many users.

Another issue has to do with the very concept of the set-top box itself. Set-top boxes are not the only way to watch streaming video on TV. Google's Chromecast, for example, is an inexpensive thumb-sized device that plugs directly into the HDMI port of your TV. With it, you can stream content wirelessly from any laptop, tablet or smartphone straight to the TV. The Roku Streaming Stick is similar, but includes a TV remote and more channels.

And then there are so-called "smart TVs," Internet-enabled TVs that can stream online content without the help of any outside box or device. Twelve percent of American households already own a smart TV, but only 70 percent of those TVs are actually connected to the Internet [source: Wood].

Why then, do we need streaming set-top boxes at all? Honestly, many of us don't. If you already watch most of your TV and movies online — 34 percent of millennials watch no broadcast TV at all — and you have an HDTV sitting around idle, then a streaming set-top box is a relatively inexpensive way to supersize your viewing experience [source: Beaujon]. Otherwise, you can stick with your current entertainment "system": Use your PS3 to stream Netflix, your DVR to record your favorite TV shows and your smartphone to watch cat videos on YouTube.

For lots more information on the future of TV, check out the related HowStuffWorks articles on the next page.