July 22, 2014

Is Aereo legal but doomed?

BVG1KrxCAAAfQI6This afternoon the folks from Aereo invited me and several other early adopters to lunch at the Ritz for their Dallas launch. The company has found a perfectly legal way of retransmitting over-the-air television via the internet to subscribers. The company is facing legal challenges by content providers, but they have successfully fought back each one time after time. The bad news? Content providers don’t make money when Aereo sells subscriptions to consumers.

My business partner at HAUL, Robert Bennett, met with Chasey Carey the COO at FOX who indicated that they will end over the air broadcasts if they can’t protect their over the air broadcast rights. Over the past decade content creators’ business models have changed whereby their revenues have transitioned from advertising to broadcasting rights. Content creators don’t make any money from OTA and make all of their money from OTT. What does this mean? If companies like Aereo make it easier for consumer to fire Time Warner, Comcast and Direct TV – over the air transmission will end. Ouch.

The good news is the Aereo has built an amazing product – basically a cloud based DVR for TV consumers. Basically TIVO without the box. To exist longterm they will simply need to enter into licensing agreement for content. The bad news? The service will cost more – likely driving down the cost of cable and satellite TV. In the meantime? Enjoy low cost content. I’m considering firing Time Warner. Maybe as soon as this month. I’ll let you know.

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