In 2012, the inventors of Aereo, with investment from Barry Diller of IAC, put pressure on TV producers and networks’ control of content. It was basically a goofy idea: Servers at a data center would employ miniature antennas that would capture broadcasts, convert them to internet signals, and send them to customers who were paying about $30 a month.
Quick legal action came as a surprise to no one. The technology was ruled a copyright violation by the lower courts, who were quickly upheld by the Supreme Court last spring. Aereo slowly faded away and what is left of the company is disappearing. This week, it shut down its Boston office and laid off 43 employees. The company’s threat to the cable distributors is going away.
For Aereo founder Chet Kanojia, the affair is a big defeat. For Diller however, it’s probably the effect he has always been hoping for. The goal was more designed to attack the cable companies control of TV content.
The content distributors have increased their control by making a selective variety of content available to phones and tablets. Mostly however, it has been available only to cable subscribers who have to supply registered identification to receive shows via the internet.
But major players have started to change the game. CBS All Access provides streaming broadcast to over a dozen big cities. In effect, it’s like Aereo for one network, offering content for $5.95 a month. Not all the programming is available though. In particular, the National Football League blocks its games (the NFL has its own deal with DirecTV for internet game delivery). HBO, unlike the HBO GO internet service for cable customers, will offer internet content to subscribers with no cable subscription.
Most broadcasters are moving slowly to the new game. They have always been reluctant to mess with their existing successful relationships. (Don’t overlook the fact HBO came up with the internet channel after its owner, Time Warner Inc., sold off Time Warner Cable.)
But the pressure is likely to become irresistible. As the expense of cable networks extends to both viewers and content owners, direct internet delivery is going to become an ever more popular channel.