Can Devices like the Kindle Fire Finally Pave the Way for a la Carte Cable?

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Pundits asking whether the new Kindle Fire will be an “iPad killer” are way off the mark. It’s a killer alright, but the victim is not who you think it is. “We don’t think of the Kindle Fire as a tablet. We think of it as a service,” says Amazon CEO Jeff Bezos.

And the main competing service in his sights is cable TV.

The Fire, of course, is not the only killer gunning for cable. Amazon’s streaming video service is available on dozens of TV-connected devices, including TiVos and Roku boxes. So is Netflix, which although it has stumbled a bit recently, is clearly positioning itself as a streaming alternative to cable. And of course let’s not forget Apple, with not just its iTunes movie and TV offerings, but also Netflix on all its devices, including the Apple TV.

(IMAGES: Amazon’s Kindle Fire and New Kindle E-Readers)

Cable operators are feeling the heat. Comcast and Time Warner, the two largest operators, have reportedly lost 1.2 million cable TV subscribers in the 12 months ending June 30. Many of these are said to be “cord cutters” who prefer the flexibility of online video, such as Amazon Instant Video, which lets them choose a la carte what they want to watch whenever and wherever they want.

Yet cable prices continue to rise. One reason is the climbing cost of programming itself. Cable companies (like Cox or Charter) pay programmers (like Disney or Discovery) to carry their networks, and in turn they charge consumers. Programmers have been hiking prices for their content, often as a result of access to sports content. ESPN, for example, recently signed a $15 billion, eight-year TV rights deal with the NFL, a 73% increase from their last agreement. That’s one reason why the sports network is the most expensive channel to operators, at about $4 per subscriber. Yet the more prices go up, and the more choices like Amazon and Netflix are available, the more we can expect viewers to cut the cord.

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