Amazon's Fire TV Is Bigger And Growing Faster Than Roku

Amazon (NASDAQ:AMZN) is expanding its lead in streaming video. The company said it has over 30 million active users for its Fire TV devices. That's 3 million more users than Roku (NASDAQ:ROKU) announced it ended the year with earlier this month.

What's more, Fire TV users are growing faster than Roku users. Amazon last reported 25 million users in October. Roku's third-quarter report says it ended September with 23.8 million users. So Amazon has added 5 million new users in the same time Roku's added 3.2 million.

Amazon's success is exemplary of how its ecosystem drives customer loyalty. And considering the size of the e-commerce titan's customer base, that's bad news for Roku and anyone else interested in the streaming TV space.

Prime is driving Fire TV

There aren't many reasons to choose a Fire TV device over a Roku device.

Roku's platform-agnostic approach means it supports more services and doesn't favor any of them. Fire TV devices are notably missing a YouTube app. Streaming YouTube on television sets is becoming increasingly popular, according to Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) management. Roku consistently receives better reviews than comparable Fire TV devices.

But there is one case where Fire TV offers a better experience: if you're a Prime member and want to watch Prime Video. The user experience becomes even better if you subscribe to Prime Channels, Amazon's premium streaming-video subscription add-ons for Prime members.

Around 95 million Americans have access to Prime in the United States. Amazon says over 100 million households worldwide subscribe. Prime Video Channels generated an estimated $1.7 billion in gross revenue last year. That's a pretty big audience to sell Fire TVs to.

As more and more people join Prime, and more Prime members subscribe to Channels, it ought to boost the sales and stickiness of Fire TV devices.

Roku is fighting back

Roku is fighting back against Amazon through its Roku Channel. The company wants to take the content-first user interface available on Fire TV for Prime subscribers and make it available to everyone.

The Roku Channel offers free ad-supported content to Roku users. It's also available on select platforms like Samsung smart TVs. Roku will soon sell premium subscriptions to users through the Roku Channel, aggregating premium and free content in one spot. The move will make The Roku Channel look a lot more like Fire TV, which combines Prime Channel content with regular Prime Video content on the home screen.

Such a move could help lock in existing Roku customers, but it doesn't bring new customers to the platform. There's nothing driving customers to sign up for premium subscriptions via The Roku Channel if they don't already have a Roku device. Comparatively, there are plenty of reasons to sign up for Amazon Prime before you have any Amazon devices at all.

Amazon has developed a strong ecosystem of services and devices that all support one another. Prime is the driving force, but Prime members with an Alexa-enabled device have proven even more loyal to Amazon.

It's created a symbiotic relationship between Prime and its services, which helps drive sales of both. Few other device makers can claim the same, and that's why Amazon has surpassed Roku relatively quickly and is growing significantly faster as well.

This article originally appeared in the Motley Fool.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Adam Levy owns shares of Alphabet (C shares) and Amazon. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Amazon. The Motley Fool has a disclosure policy.