Broadband Cable Association of Pennsylvania

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April 3, 2014

Amazon.com Inc. on Wednesday unveiled a set-top box for streaming video and games, thrusting it into a highly competitive market dominated by Apple Inc., Roku Inc., Google Inc. and others. The new Fire TV, as it is known, is an ambitious move by Amazon to break into the living room. Amazon offers a streaming-video service to its Prime subscribers, but until now has been largely dependent on other hardware manufacturers to deliver that content to televisions. Sales of streaming media devices such as Roku are expected to grow 24% this year, according to market researcher Strategy Analytics. Apple today leads the market, followed by Roku and Google, the firm said.

At a presentation in New York, Amazon executives highlighted the device's game platform and voice-activated search commands. "We hear about what's working and we hear about what's not working" with other streaming devices from the millions sold through Amazon.com, said Amazon Kindle Vice President Peter Larsen. At $99, the Fire TV is priced near the high end for streaming devices. Google's Chromecast, a small dongle that plugs into TV sets, was a runaway hit in part due to its $35 price tag; last month, Roku began shipping its own $50 dongle. The Apple TV streaming device is $99. Meanwhile, traditional pay-TV distributors like Comcast Corp. are deploying their own advanced set-top boxes that they lease to customers for monthly fees, with similar features like voice search and Internet-enabled apps.

The cost may disappoint consumers who had expected Amazon to offer a break to subscribers to its Prime unlimited shipping and streaming-video service. Amazon recently raised the annual Prime price by $20, or 25%, in part to recoup some of the cost of content acquisition and rising shipping rates. Analysts said Amazon's ambitions appear to extend beyond selling set-top boxes to creating a new avenue for selling content like games and movies. Chief Executive Jeff Bezos has said that Amazon prefers to make money when users buy content through its hardware, such as the Kindle Fire tablet, rather than through sales of the devices themselves. "Amazon is not really a hardware maker; they make devices to help sell you more stuff," said Carl Howe, a Yankee Group analyst. "This is the point-of-sale device for selling you streaming video and games." Amazon as a policy hasn't previously disclosed sales figures for its hardware, including Kindle e-readers and tablets.

The Fire TV, which Amazon said would begin shipping Wednesday, offers apps from companies such as Netflix Inc., Hulu LLC and Walt Disney Co.'s ESPN. Amazon said thousands of games, including the popular "Minecraft," will be available through the device by next month, with many costing less than $2, while the game controller costs $39.99. Amazon executives also said the company's own game studios division is developing original games for the box. Amazon has been pushing more aggressively into streaming video to compete with Netflix, with shows like political comedy "Alpha House." Last month it selected a new slate of original programs it will produce for Prime members and is weighing an ad-supported video service with additional content that may be available to a broader swath of consumers, people familiar with the matter said. Yankee Group's Mr. Howe said that by releasing a device of its own, Amazon will learn more about its consumers' viewing behavior, particularly when they aren't using Amazon apps, which could help the company better tailor product recommendations and for-sale streaming content.

In an interview, David Limp, an Amazon vice president, said the focus of the device is "entertainment" rather than selling merchandise. "We haven't figured out a way to do physical shopping on this device in a way that we think is really differentiated" from other shopping experiences on tablets and smartphones, Mr. Limp said. Until the company can figure out a way to make shopping easier through a set-top box, it would "get in the way of the entertainment focus of the device." Mr. Limp said Amazon accelerated development of the device in the past 12 to 18 months as the technology fell into place to support games and voice search in a small box. He noted that it is "hard to get world-class performance" in smaller devices such as dongles. Besides offering access to some 200,000 movies and TV episodes, the company said, the device will let users listen to music through a variety of services. The company said Fire TV has controls that let parents limit what the types of programming their children watch and the times of day they can watch. Wall Street Journal; also in Washington Post - For Amazon, could be e-commerce in your living room

While the YES sports network channel has been removed from Service Electric Cablevision (SECV), eight more channels are staying. Tim Trently, SECV division manager, said Wednesday another negotiation did end successfully, and the eight Viacom channels - Nickelodeon, Comedy Central, MTV, VH-1, TV Land, CMT, BET and Spike TV - will remain in the SECV lineup. "The Viacom issue has been resolved and there is no chance of SECV removing any of those channels," Trently said Wednesday. In a story on the removal of the YES sports network from Service Electric Cablevision in Wednesday's edition, it stated, "You certainly have the choice to switch, and we appreciate your business," in quoting a recording on SECV's main telephone number, on the subject. Trently said the recording stated "You certainly have a choice for service, and we appreciate your business." Hazleton Standard-Speaker

With crucial Supreme Court arguments over the legality of Aereo scheduled for later this month, one of the streaming service's major investors, Barry Diller, said on Wednesday that its viability as a business was riding on the decision. "If we lose, we're finished," Mr. Diller, the chairman of the IAC/InterActive Corporation and an early backer of Aereo, said in an interview with Bloomberg TV. "I can't see any path forward. It probably would not be able to continue in business."

The case, American Broadcasting Companies v. Aereo, is scheduled to be heard by the Supreme Court on April 22, and will be examined for implications well beyond the two-year-old streaming service, which currently operates in about a dozen cities. Aereo is the brainchild of Chet Kanojia, an entrepreneur who made a fortune in software. It uses miniature antennas to capture broadcast signals that it then transmits to subscribers, who pay a monthly fee of $8. Users can watch content live or have it stored in a digital video recorder.

The broadcasters argue that this amounts to theft of their content and violates copyright laws. dditionally, the broadcasters say that a decision favoring Aereo would jeopardize the system of retransmission fees, as cable and satellite companies might follow Aereo's lead and try to find ways to avoid paying for content. Aereo says its service simply harnesses what the public has been able to do since the era of rabbit-ear antennas: watch broadcast television over public airwaves.

Several broadcasters have said they would consider abandoning the public airwaves altogether to become pay cable channels in response to a loss at the Supreme Court. Asked about that possibility, Mr. Diller said, according to a transcript released by Bloomberg, "It's a nice threat" that would imperil television access for tens of millions of people "who don't subscribe to cable or satellite and who do get over-the-air." But, he added, "it's inconceivable to me that it could actually happen."

Mr. Diller painted his own dark situation if Aereo lost, saying there would be a chilling effect on services like Netflix and Amazon Prime. "The ubiquity of the Internet and the ease of a DVR in the cloud," he said, is "most at risk in - if the Aereo decision goes against us, because essentially all innovation in that area would - I mean, be litigable." As for what happens if Aereo prevails, Mr. Diller said: "We compete. We go on to build our business." New York Times; also in Fierce Cable: Aereo CEO wants to sell cable operators a cloud-based DVR for $10 per sub

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