Even though some legal pundits doubted it would happen, the US Supreme Court has agreed to hear the case TV broadcasters have been pursuing against upstart antenna + cloud + streaming startup Aereo. The full petition submitted to the Court (found here) is a fascinating read, and promises a lively oral argument in April - and a mother of all decisions come late June.
Although somewhat surprising given that broadcasters have lost every circuit decision so far, Aereo’s move last month to actually ask the Court to take the case virtually guaranteed it would - especially as it invoked the potential broader threats to cloud computing (think Dropbox, Google Drive, etc.) and media innovation.
(The US Second Circuit Court of Appeals ruling in 2008 in the now-famous Cablevision RS-DVR case opened the legal door for TV + cloud storage and all the innovation that’s come from it.)
Simply put, if consumers are allowed to buy antennas, DVRs and Slingboxes, there is likely no reason why they cannot legally lease them. The case will, instead, hinge on whether the court reaffirms the view that Aereo creates private performances from technology leased solely for an individual’s personal use versus that of a public performance (as broadcasters believe) and that the “volition” (or choice) is entirely on the consumer (meaning recordings are only created/streamed if an Aereo subscriber initiates).
An Aereo victory would have far-reaching consequences tied to retransmission consent and the profitability of over-the-air (OTA) broadcasting, while a loss would cement the current structure of pay TV retransmission fees and potentially imperil numerous aspects of cloud computing/storage, especially with respect to media (in other words, nearly half of what you just saw at the Consumer Electronics Show this week).
If Aereo is found to be legit (which we believe it will be), it will hasten the advent of unbundled, "good-enough" TV solutions that would use a basic OTA broadcast bundle of programming (including multi-cast channels) as an inexpensive gateway to other subscription programming that could be added to it via over-the-top (OTT) and pay TV subscription. Operators will waste no time in seeking to unbundle broadcast signals from their channel packages using an OTA antenna-like approach like Aereo’s (something Dish Network’s Hopper platform has been pushing for some time).
In other words, consumers will consider broadcast signals as the new base TV platform - with the option of “re-bundling” on top of it from there. An OTA antenna + a Roku OTT stick is a potential “good enough” combination for some, for example.
What will happen next will likely be more interesting - a bifurcation of TV/video content delivery.
Viewers who just want no-frills access to broadcast content can get it via OTA or OTT solutions. For those who want more premium bells and whistles - like authenticated online access offerings such as WatchESPN, live whip-around channels like NFL RedZone, or even NBC’s upcoming Gold Zone all-access Olympics channel - subscription programmers packages via pay TV providers will ready for the buying.
Thus, both programmers and pay TV operators will have an incentive to upsell viewers to the pay product. (And broadcasters will still have the ability to derive both ad and subscription revenue).
You can also expect Aereo and other OTA solutions to offer their service through OTT apps through TV platforms like TiVo, XBox and Roku’s new “RokuTV” multi-input video portal (shown below). And for broadcasters to bundle their basic OTA channels into their own apps for direct live streaming to consumers/viewers via broadband.
Of course, if Aereo loses, then it’s retrans hardball as usual - but only until Congress starts moving towards rewriting overall cable and broadcast rules - the inevitability of which is already clear.