Aereo TV – Why it’s important

First off, Aereo TV is truly an innovative service.

They have figured out how to bring local television to an internet crowd that really doesn’t want to be connected up to a cable or satellite line. Not to say that this is entirely a good thing, it’s just another option and isn’t that what we all now live for….vast amounts of choices and opinions?

For those of you who do not know what Aereo is, it’s a service that rents to you a small antennae (about the size of a dime) and DVR capabilities specifically to that user for $8 USD a month. It allows you to access local streaming content that you would normally have to pay much more for if they had to go the satellite, cable, or telecom provider. In fact, broadcasters have sued Aereo for copyright violations to stop them (which was over ruled), and now the Supreme Court has been called upon to decide whether or not those allegations are true.

If the Supreme Court rules in Aereo’s favor, the decision will change the face of the television landscape forever (and of course there’ll be all kinds of new little boxes promising all kinds of new services).

Then ALL media companies that have anything to do with television rebroadcasting will be impacted…in fact, they’ll probably threaten to “pick up their ball(s) and go home.” Harrumph, probably shouting as they leave the courtroom…”if I can’t control the viewers then I do not want to play.”

So, what does this mean to the industry? There are two major, MAJOR impacts for the TV industry if Aereo is ruled to be a legal service 1) Aereo TV would be a benefit to the existing cable, satellite, and telecom providers, they would now have the opportunity to do the same thing. In fact, some program distributors have reportedly already been in talks with Aereo to develop partnerships. And 2) probably the biggest impact – the content programmers would have their business model destroyed . Cable and satellite folks would now be able to offer services at prices far below the existing price points because of lower retransmission costs. It could also result in expanding their customer bases because of lower prices which wouldn’t be a bad thing, would it?

The challenge then would be the response of content providers such as CBS or FOX. Fox and others have already said that if Aereo wins the battle they’ll only offer their content on their own cable channels. Back to if you can’t beat them…join them.

Now that’s somewhat important as it would mean that there would be no content for Aereo to pick up and stream to others. Well, that’s defeating isn’t it.

Cable channels can’t be accessed by an antennae in the way broadcast channels can. The problem with that option is that fewer people watch cable, and all of the major networks would take a financial hit. Fewer new programs, probably lower quality programming….so I suppose we’d need to get ready for Reality programming at all hours.

For satellite content distributors like DirecTV, it would have a similar impact to that of cable companies like Comcast. In the case of DirecTV, it could either make a deal with Aereo or it could copy the Aereo by offering perhaps new a la carte offerings at inexpensive prices. The reason that the packages could be low cost from all offerings would be because it would no longer have to pay high-priced retransmission fees to content providers.

Now to the heart of the matter: re-transmission fees
 If Aereo wins it’s a big hit on re-transmission fees. RT fees are what content distributors like Comcast must pay in order to offer TV shows to consumers. Retransmission fees provide content providers the means to create, if they were to be lowered in value then the entire TV content industry’s revenue would shrink. Reality programming becomes our programming.

Advertising will remain under pressure too because you can fast forward with Aereo through all of the advertising. DVR on steroids.

Consumers don’t hold the content providers and distributors in high esteem at this time, and if an alternative means to accessing content is provided at a much better price then it’s inevitable that people will run to those services. If that happens, it’s the content providers that will take the biggest hit.

Another perspective in all of this is that there’s somewhat of “I told you so” by the Net Neutrality folks, and that means the ones that could really help everyone create new business models are the broadband network providers. IPTV platforms, cable platforms would probably be a good position and possibly need to consider new service tiers – internet only (email, information/search) or high speed – television quality speeds.

So, we’re about to directly experience a shift in the market that will take us openly into the next chapter or in some ways stall us for a little while longer while all of us get ready for the next level.

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