Why Aereo Is/Isn’t a Big Deal

Aereo has been super savvy in grabbing headlines of late. If you’re not caught up on the story so far, the start-up TV company has expanded to a few new markets, won another round in court against broadcasters, and left Fox, CBS and others frothing at the mouth and threatening to move free programming over to a paid service model.

The thing about Aereo is, while the conceptual disruption is huge, the impact of the actual service is still vanishingly small.

• Aereo is a Big Deal because broadcasters make bundles of cash from retransmission agreements, and the Aereo model creates a workaround for any service provider that wants to distribute free broadcast channels without paying a licensing fee.
• Aereo is a Big Deal because, as I wrote recently for Light Reading, it opens up the debate over whether there will continue to be a role for free TV in the Internet era.
• Aereo is Not a Big Deal because the service itself has serious limitations. In addition to being available only in a few markets, the service is getting poor marks for video quality.
• Aereo is Not a Big Deal because it is only one of several disruptors on the television scene. Start-ups and stalwarts alike are experimenting with new services and pricing models – from Simple.TV, Skitter, and NimbleTV to Dish, Verizon, and Time Warner Cable.

I will admit that Aereo has gotten farther in court than I expected, but it’s still early days yet. And while Aereo has relied on the Cablevision network DVR precedent so far in its legal battles, it’s important to remember that Cablevision pays licensing fees before storing programmers’ content in the cloud and distributing it to viewers. I’d be shocked if the courts ultimately allow for a wholesale termination of the retransmission model for broadcasters as it stands today. More likely, there will be a slow transition as content owners negotiate new distribution deals for streaming content, some of which will include free viewing, and some of which will require a subscription.

Aereo has started a very interesting discussion about where TV is headed. In that regard at least, Aereo has made itself a very big deal – whether the company itself survives the fallout or not.