Friday, February 23, 2018

Despite Aereo decision, some see opportunities for online TV

LOS ANGELES — The Supreme Court shot down Aereo's business model this week, but that doesn't mean customers' desire for a better TV experience is gone.

Americans are still fed up with huge channel bundles, high prices, poor service and an inability to watch all their shows on all their devices. That's part of why Aereo was attractive: It offered a few dozen broadcast channels on multiple devices for just $8 a month.

Industry watchers say the pay TV business must continue to evolve to win over unhappy customers, even if the nation's top court said distributing signals online without content-owner permission isn't the way.

"Even without Aereo, the reason people were cutting the cord, for cost reasons and so on, those don't go away," said Robin Flynn, an analyst with market research firm SNL Kagan.

Last year, the number of pay TV subscribers in the U.S. fell for the first time, dipping 0.1 percent to 94.6 million, according to Leichtman Research Group.

SNL estimates that 5 percent of homes will substitute pay TV with one or more Internet video services by the end of the year, rising to 10 percent in 2017.

Many companies, including Netflix and Amazon, are offering quality TV content online for low cost to meet that rising demand. Hulu, owned by major broadcast networks ABC, NBC and Fox, offers full episodes of popular shows the next day for free.

While that's not live TV, which Aereo offered, for many, it's a good-enough substitute.

The decision against Aereo is a setback, but not a fatal one for people who want to break away from traditional TV, said Bill Niemeyer, senior analyst at TDG Research.

"While the content on the major broadcast networks is very important for some people, it's not important for everyone," Niemeyer said. "So it's a dent, but I don't think it's going to significantly change the trends."

If anything, the rise and fall of Aereo has highlighted an important fact — high-quality TV signals are available on the airwaves for free — something that might have been forgotten if Aereo hadn't insisted that its technology simply replicates the antenna and wire that an average person could set up on their own.

"What Aereo has really done in our perspective is to address the lack of understanding that over the air is free," said Mark Buff, CEO of Mohu, a company that, since 2011, has sold 1.5 million flat indoor antennas that attach to walls.

Alki David, CEO of online streaming company FilmOn, said the court's ruling actually creates opportunities for startups because the court said Aereo bears an "overwhelming likeness" to cable companies.

According to David, that means online video companies can compel broadcasters to license their TV signals under the "retransmission consent" rules outlined in the 1976 Copyright Act. That could help online video companies create small broadcast channel-only bundles rather than more expensive 100-plus channel packages from traditional pay TV operators.

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