Fox network creator Barry Diller introduced a new over-the-top video service yesterday called Aereo. Many are already calling it dead in the water, but there are several reasons I’m more optimistic about Aereo than competitive OTT services launched in recent years.
To take a step back, Aereo is offering a service that delivers broadcast TV stations over IP and bundles them with a DVR. Stations are available on iOS and Roku devices, with Android, PC and Mac browser support scheduled to kick in by mid-March. The service is $12 a month, and is currently invitation-only in New York. Aereo will open up to the public in NYC on March 14th.
In order to be successful, Aereo will have to deliver stellar quality of service. These are free broadcast TV channels after all, which means people can use their own antennas to get the same content at no cost. However, in addition to the DVR add-on (which is pretty compelling in itself for today’s non-cable households), Aereo promises decent picture quality – no need to futz with antenna positioning or manipulate around dead zones. That’s a potential combination of DVR, picture quality and convenience. Not bad.
In addition, I think Aereo’s got a few other things going for it:
1. Simplicity – Aereo’s not trying to do too much, which is arguably what put Sezmi in the deadpool.
2. The Right Price – $12 plus a Netflix subscription for $8 still puts you under the cost of a cable TV economy tier.
3. It’s Internet TV on Your TV – The Roku and other new in-home streaming solutions make it easy to get this Internet content on the living-room TV, something that was a lot harder to do a year or two ago.
Unfortunately, Aereo also has some hurdles to clear. There was a brief moment when I thought the service would steer wide of consumer broadband caps. A GigaOM article pointed out that “Aereo users are not paying for content but are renting the antennas and paying for bandwidth, power and other costs.” My brief hope was a little ridiculous though, as I realized Aereo’s not talking about bandwidth in the last mile. The TV channels are still being delivered over the Internet, which means streaming those stations will count toward any ISP usage cap.
Second, and more importantly, Aereo’s likely to have a big legal battle on its hands. The company’s betting it can succeed by relying on precedents set in the Cablevision network DVR case, but several people have pointed out that Aereo is much less similar to Cablevision than it is to Zediva, a company that lost its copyright argument because it actively re-transmitted available broadcast signals. Retransmission fees have become a huge issue for content owners, and even the broadcast networks now expect to make significant revenue through the retransmission channel. If Aereo manages to get around that fee, it will lay a path for others to take advantage of licensing workarounds. Aereo would set a powerful legal precedent, and you can bet the TV networks will fight tooth and nail to prevent that.