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.