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Best Buy to Drop Roku From Insignia TVs in Aftermath of Amazon Partnership

Amazon's Fire TV platform was the apparent winner, Roku TV the loser, in Wednesday's announcement that Amazon will partner with Best Buy in an exclusive multiyear arrangement to sell Insignia- and Toshiba-branded Fire TV Edition smart TVs in the U.S. and Canada. Best Buy confirmed Wednesday it will phase out Roku TV support from Insignia smart sets, after the companies said that Fire TV Edition smart TVs, with Alexa voice control, will be available exclusively in Best Buy stores, on BestBuy.com, and for the first time, from Best Buy as a third-party seller on Amazon.com.

"Smart TVs by Insignia will transition to the Fire TV platform," Best Buy spokesman Jeff Shelman emailed us Wednesday. "However, we will continue to sell a number of other Smart TVs embedded with Roku, and we will also continue to sell non-connected Insignia TVs." Roku representatives didn't comment.

Paul Gagnon, IHS Markit executive director-research and analysis, predicted earlier Wednesday with the Amazon partnership announcement that Best Buy would soon drop Roku TV support from Insignia smart sets. Gagnon also had been "expecting Amazon to partner with another TV brand to push the integrated Fire TV solution after the Element/Westinghouse launch last year was a bust,” he emailed us. Element, Seiki and Westinghouse used the January 2017 CES to introduce the first line of Ultra HD smart sets with Amazon Fire TV and Alexa-based voice remote.

Gagnon also thinks it’s “interesting, but logical,” that the TVs marketed through the partnership will be available through Amazon.com with Best Buy as a third-party seller, he said: “Will have to wait and see what the promotional effort looks like, but with combined Amazon and Best Buy promotional power, it could be significant.”

The first step in the partnership will be the launch of nearly a dozen 4K and 1080p Fire TV Edition models under the Insignia and Toshiba brands beginning this summer in the U.S., with Canada to follow later this year, they said. Amazon CEO Jeff Bezos cited the two companies’ “long history of working together,” and said the TV pact takes the partnership “to a new level.” Best Buy CEO Hubert Joly said the TV partnership "strengthens the growing connection between home theater, home automation and voice control.”

The newly designed smart TVs are an obvious appeal to cord cutters, combining the Fire TV experience with live over-the-air TV and streaming content in one location. “Connect any HD antenna and instantly use Alexa to search for and watch broadcast TV,” the companies said, along with streaming content from Netflix, Prime Video, HBO, PlayStation Vue and Hulu, among others. The TVs come with an Alexa-enabled voice remote, which consumers can use to launch apps, search for TV shows, play music, switch inputs and control smart home devices, they said. Echo devices can also pair with the remote to control the TVs hands-free, they said. Fire TV Edition models will update regularly with Alexa skills, software features and apps, they said.

When Toshiba pulled the plug on its North American TV business three years ago, it said it would cease TV development and sales operations and license the North American TV business to Taiwan’s Compal Electronics, the original design manufacturer with which Toshiba had a longstanding supply relationship (see 1501290047). In the U.S., “Compal is still the license holder for the Toshiba TV brand,” said Gagnon of IHS. He thinks the Compal license agreement expires in 2020. “Of course, Hisense purchased the Toshiba TV business” in November for 12.9 billion yen ($120.2 million), “so I would expect the control to flip to Hisense once the agreement with Compal expires,” he said. Compal and Hisense representatives didn't comment.

The Amazon-Best Buy pairing “speaks to the recognition of Amazon’s position in television," ProSource CEO David Workman told us Wednesday at his buying group's spring meeting in San Antonio. The partnership is an indication Amazon recognizes the tie between online and physical store retailing for TVs, said Workman. “Television specifically is a category that they have surprisingly low share in," he said of Amazon. "They’re extremely smart guys, and in that category they probably realized they need brick-and-mortar presence,” he said. Amazon didn't comment.

The partnership won't have much of an impact on ProSource retailer members because the buying group is focused on mid- to high-end TVs, said Workman. “That’s the only place where we can exist, play and provide what we do for consumers.” The partnership doesn’t affect ProSource’s positioning with its TV vendors LG, Samsung and Sony, and “I don’t think it changes anything as far as the direction of what we do.” ProSource has been able to benefit from TV sales “when we can place the right product through that window," he said. “It’s a continued evolution of finding all touch points for where the products need to be” to reach consumers today, he said.

ProSource now has the buying power to compete with Amazon and Best Buy through its 560-dealer membership, said Walt Stinson, president of ListenUp in Denver and vice chairman of the ProSource board. The Amazon-Best Buy partnership shows that "scale matters," said Stinson. "These deals get put together because of scale. It’s critical that our segment of the industry have a seat at the table and we do.” AV specialists may not be interested in a deal built around Fire TVs, he said, “but there other deals that we’re working on that are more important to us and our segment.”