Aereo, Hopper, Online Video, Disrupting Broadcast, Cable TV; NAB Show

Aereo, Hopper, and Online Video all have one thing in common: they’re all combining to disrupt broadcast and cable television. (Zennie62Media NAB Show coverage sponsored by StardustBlue Media.)

This video from TechFeed sums up the problem:

Aereo, Barry Diller’s new Internet-based company that offers you the chance to watch live broadcast TV on your computer for just $12 per month (or less under some circumstances), has so upset executives at companies like News Corp.’s – take its COO Chase Carey, who used the NAB Show platform to announce Fox and its affiliate stations would stop broadcasting and serve only pay-TV customers to protect the billions of dollars spent annually on programs, and the billions made by subscribers.

But, if you think about that threat, Fox taking its programming totally to cable would largely not work over time. That is so because it assumes that all Fox content is equally desirable. What will happen is what already happens: NFL content will be the driver of all other Fox content on cable – assuming the NFL plays along.

Right now, the NFL primarily uses the free airwwaves to show many of its games, but ESPN and the NFL Network host NFL games on their own cable channels. What’s to stop the NFL from not playing along with Fox, and pushing all of its content to the NFL Network?

If the NFL does that, it could wreck Fox’s threat. Indeed, the NFL Network rests as a kind of cable-based threat to News Corp and other companies that says “We too can focus our content on our own channel, and not yours, unless you pay us what we ask for?”

For the present and for the future, the NFL’s announced it’s sticking with Fox. Greg Aiello, NFL Senior Vice President Of Public Relations, wrote in response to the question would the NFL take its content and push it all to the NFL Network if News Corp / Fox moves to an all-cable format “No. We support our partnership with Fox. We will monitor the situation.”

The problem Aereo presents for many NAB members is that it’s seen as taking content from them via broadcast signal stripping, and not paying for it. Aereo makes its’ money via ad revenues, not fees, thus keeping access costs for the consumer at zero, an undoubted plus for consumer advocacy groups.

Aereo’s taking advantage of a legal loophole opened by the 2008 Cablevision DVR court ruling which said that because the individual user of a DVR is the one who makes the decision to copy a show, the corporation, Cablevision with its DVR, was not violating copyright laws. The intellectual underpinning of the 2008 ruling was the 1983 Supreme Court decision that protects home tv recorders, in the case of the Sony Betamax at time. Thus, the two court decisions combined have basically extended the same device rights to a web service, like Aereo.

Hopper Takes Away Ads, Makes DISH Enemy Of Hollywood

On the other side of the triangle we have DISH Network’s new “Autohop” or “Hopper” device that allows you to DVR programs, and skip all of the ads in the process. Like Aereo, Hopper has faced and withstood court challenges thus far, and from CBS, NBC, ABC and Fox, and winning all on the point that as long as the market wants something like Hopper, it’s allowed to exist – at least until the outcome of the current appeal to a judge’s decision to reject Fox’s argument in 2012.

And yes, at the other end of this legal battle, like that in the Aereo case, is News Corp / Fox.

Like it’s war against Aereo, News Corp has sought to block use of the Hopper option on the DISH Network Service. It’s not likely that Fox will win its appeal (my prediction) thus making the possibility that FOX and CBS will move all of their content, including NFL Football, to cable-only, all the more real.

Why?

Because the ad-supported business model doesn’t bring enough revenue to sustain a modern broadcasting concern; the cable subscription plus ad model does. But what’s causing a growing rate of “pull-the-plug” actions is the cost of cable, the decline in relative household income over the last 15 years, and poor cable TV customer service in a social media world. Last year was the first one in history that fewer people watched television on a TV set, than the year before, and where they went was the Internet.

That’s where online video viewership has grown to a point where, in 2012, it was at 188.016 million and while that’s not over 75 percent of the American population, it is also not including mobile devices. To use my YouTube Channel Zennie62 as an example, 50 percent of my view traffic comes from mobile devices. Thus, one could make an argument that the view number’s really over 250 million when mobile devices are included.

Aereo is available for mobile devices.

Will DISH Buy Aereo?

DISH has proven to be a formidable legal opponent, and belligerent even to the point of suing ESPN for live streaming games. But guess what? That’s also what Aereo’s does. The only logical reason why DISH would allow such a development is that DISH Founder Charlie Ergan is in talks to buy Barry Diller’s Aereo.

That’s the only logical reason.

If that happens, look for a number of television execs to toss their cookies as one. Mr. Ergan is hated in the indusry, and he would have gotten the other disruptive player, Aereo, under his control.

Right now, we’re in a period of giant uncertainty regarding the future of television, but what’s clear to this blogger is all of it points to the personalized Internet. A model of what that looks like can be seen on a United Airlines plane.

I was on a Boeing 737-900 from Las Vegas to Newark last night. Along the way, I got up to use the bathroom. On the way back to my seat, I saw a screen after screen of DIRECTV telecasts – movies, sports, etc. It occured to me that in the not-distant past, we all looked at one video screen and the makers of that content benefited from an exclusive audience – not any more. DIRECTV gets the money, but no one item of content holds the majority of eyeballs.

And then consider this: when the FAA inevitably allows Internet access in the air, content accessible via the iPad will take viewers away from DIRECTV, and because the only cost associated with that will be the Internet Service Provider.

That means DIRECTV loses out, unless it decides to become the ISP. The point is, the move is toward any one company controlling the means of broadcasting content, and to more and more content made using individual devices like smartphones and iPads. That makes for huge potential shits in where revenue goes, who gets it, and how much of it, ushering in an ugly period of new apps, a lot of layoffs, and new lawsuits.

Who will win? The one company that first acquires all aspects of the television business spectrum, from content making to distribution, and all at once.

Stay tuned.