You may have heard about this little company called Aereo TV that has recently shaken the traditional broadcast industry up. In a nutshell, they offer broadcast television streaming live online or devices through a digital antenna via a low monthly subscription a la Hulu Plus and Netflix. They also have a DVR built in. But the way that they do this is what has been controversial. Through what many broadcast networks deem a legal loophole, Aereo captures the over-the-air signal of the main networks and then retransmit those free signals to consumers without paying the networks for that content. Traditionally retransmitters of that content either have to have a license or at least pay the networks for that content, so the networks say the same rules should apply for Aereo. After all Aereo is making money off of their content - they should be reimbursed, right? It's had Les Moonves of CBS up in arms and even caused Fox to threaten to become a cable channel if Aereo was allowed to stay in business.
Admittedly, the way Aereo has gone about this has been a very "in-your-face" combative way - first rolling out in the major networks' backyard of NYC and this could be because it's main investor is billionaire Barry Diller. CEO Chet Kanojia is no shrinking violet either. We saw him speak at the Digital Summit earlier this year, and he was unequivocal about his dislike of advertising (yes- he said this speaking at an advertising conference), and how all new inventors are not welcomed with open arms in an industry when they first roll up on the scene. And in all honesty, when you are taking on huge media conglomerates, it's best to come out with guns blazing - legally, and otherwise. This strategy has seemed to work for them so far, as they keep winning court battles albeit sometimes due to via minute legal loopholes, but these wins further legitimizes their cause. (These wins have even been used by cable distributors as negotiating leverage in some of the many retransmission fee battles that have happened this year).
Along with their court wins, there is a growing tide of consumer support towards these lower subscription fee-based service. These "cord-cutters" are not a new trend - people that opt-out of traditional paid cable or satellite service and get a digital antenna or pay for other on-demand services that they can stream in their home through Apple TV or Roku. But with Aereo you do not have to deal with getting an antenna yourself -- plus it comes with a DVR. But while it's nice to get DVR service and all major networks for $8 instead of $70-$150, on the business side how is this sustainable for the broadcasters if they do not get compensated to produce that content that we want? That's our main question. Sure the nets may at this point make way too much from consumers, but if we want quality content we can't expect it to stay quality if it's being stolen, right? Or advertising will have to offset more of the costs which we of course don't like either.
But beyond the ethical questions, what does it mean for us in the media world? How does it affect us and our clients? After meeting some of the Aereo team and doing our own research, we feel they are not going anywhere anytime soon. I should mention that retransmitting the live broadcast signal means retransmitting the ads as well. So for now for our advertisers in the markets where Aereo is available, this service just provides free incremental reach, so we want them to grow. Also, as it grows, we want Nielsen to measure this audience - but this type of service offers a great opportunity as well for more exact targeting or possibly even clickable ads. Lots of potential for good media ideas. We are definitely tracking this company though and eager to see how this changes the TV industry from content to advertising to viewer.
Update: Here are a few articles about some more recent developments regarding Aereo and their fight with the broadcasters. The broadcasters have actually appealed to the Supreme Court to rule on the legal loophole regarding "public performances." Also, cable companies are considering copying Aereo's business model to get around paying retransmission fees. Meanwhile, Aereo is hiring in Boston despite the legal battles, optimistic about their success. The shake-up continues!