Broadcasters may have beat back Aereo, but online TV's future is bright

Traditional broadcasters face other challenges from online TV that could prove harder to beat back.

Broadcast networks may still be celebrating last month's big win where the Supreme Court sided with them in a dispute with online TV service Aereo. But even though the court's decision put a stop to Aereo rebroadcasting network TV content without paying for it--and knocked Aereo out of commission, at least temporarily--don't expect ABC, CBS, Fox, and NBC to spend too time much popping corks. They likely know that winning a battle is not the same as winning the war, and the war for consumer eyeballs between traditional and online TV is just getting started.

Like Al Capone, Aereo lost on a technicality. The notorious gangster wasn't sent to prison eight decades ago for bootlegging booze and killing people; instead, he went to jail for tax evasion--and only after he wrote the IRS and volunteered to pay back taxes on his previously undeclared criminal income. (Sometimes honesty is not the best policy.)

In that same vein, Aereo didn't lose at the Supreme Court because it was an online TV service; rather, Aereo lost because the court focused on what it was transmitting--someone else's content--not how it was transmitting it.

"Aereo picked a large and established commercial group to pick a fight with, and however clever their technical wordplay, the basic fact is that they are using someone else's content to drive value with no legal permission to do so," said Dom Robinson, a media analyst and co-founder at London-based media workflow software maker id3as. "For this fundamental reason, the courts are protecting the rights holders and have ruled against Aereo, and will continue to rule against other groups like them who derive revenue from their own models using illegal redistribution of content as the core value proposition."

Ironically, Aereo is now trying to regroup by telling anyone who will listen that it is, in fact, a cable TV company like Comcast and Time Warner, and thus deserves the same access to broadcast programming--which Aereo is now willing to pay for. Before its Supreme Court loss, Aereo said it wasn't a cable company at all, which is why it didn't need to pay fees to broadcast networks.

Beyond Aereo

Whatever happens to Aereo going forward, its approach of capturing and recording over-the-air TV programming for streaming over the Web is but one model for online TV providers. Thus, concluding that the fall of Aereo is a setback for online TV is like worrying that a lack of new Pontiacs will somehow cripple the automotive industry. It won't.

"The legal broadcasters have indeed won a battle," said Robinson, adding that "as anyone with 20 minutes online to spare will highlight, there are not just a few similar models [of online TV in use], but thousands."

One of these is Netflix, which just received 31 Emmy nominations, more than double the amount it got last year. With 13 Emmy nods for House of Cards and another dozen for Orange Is the New Black, it's clear that the Big Four networks and pay-cable channels like HBO are no longer the only places you can find quality programming. Add the growing investments by Amazon, Google, and Yahoo in the online TV space--Yahoo recently snapped up the cult TV show Community from NBC, for example--and it's clear that online services are getting serious about siphoning off broadcast TV's audience.

It's the same pattern that played out 60 years ago when upstart TV networks were trying to capture radio's audiences by adapting popular radio programs for the small screen. In other words, the networks gave viewers what they wanted, which in this case was their favorite radio shows with pictures.

Back in the present, online TV is just broadcast TV delivered by another means, rather than being something radically different, as broadcast TV was in comparison to radio. But there's no reason that Netflix, Amazon, Google, and Yahoo can't succeed in dethroning broadcast TV by giving viewers what they want, especially with broadcasters helping to drive their customers away by indirectly pushing up cable rates.

Cable concerns

And make no mistake: People hate their cable service, if a 2014 Cable Industry Brand Vulnerability survey conducted by management consulting firm cg42 is anything to go by. "Seventy-three percent of those surveyed feel that cable companies are predatory in their practices and take advantage of the consumers' lack of choice," said Stephen Beck, cg42's managing partner. "Sixty-nine percent feel that there is too little competition between among TV/entertainment content providers, and 53 percent would leave their cable company if they felt they actually had a choice."

So how do TV broadcasters fit into this mix? Well, one major reason cable rates are so high is due to the copyright fees demanded by broadcasters and the cable-only channels (HBO, ESPN, and so forth). Truth be told, some cable TV companies would probably be happy to charge subscribers less if they could, and to only charge customers for their channels they want--if only the broadcasters and cable-only content providers would let them. But that doesn't look likely to happen.

The Big Picture: Aereo's apparent end means virtually nothing to the advancement of online TV. At best, the Supreme Court decision is an indicator to online TV companies of a pitfall to be avoided--nothing more.

In contrast, the public's seething anger with rising cable TV rates--and broadcasters' complicity in those hikes--is likely to make a difference. After all, the big driver behind Netflix isn't just its content, but its compartively low $8-a-month entry price. Right now, people are willing to put up with cable and network broadcasters because they seem to have most of the "good stuff." But this can change; in fact, as Netflix has already proven, it is changing now.

As more good stuff--quality programming that attracts a dedicated audience--becomes available online, the hold on viewers that traditional broadcasters enjoy will weaken. And when--not if, but when--an online content provider finds a way to buy the online rights to live sports like the National Football League, that hold will disappear.

So yes, the Big Four TV broadcasters won a battle against Aereo. Winning the war against online TV providers will be a far tougher task.

This story, "Broadcasters may have beat back Aereo, but online TV's future is bright" was originally published by TechHive.

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