Aereo: The Real TV Game Changer

 

Over the last year as Hulu, Netflix, and Amazon Prime have continued to gain steam; another streaming service has taken the broadcast industry by storm, and can truly be regarded as the next disruptor.

 

Aereo- a startup based out of New York City, works in similar fashion to original TV by capturing a signal through antennae’s. Once the signals are obtained, the content is converted onto a plethora of DVR’s and then made available to users for viewing. The cost for the service is roughly $8 – $12 per month and is currently operating in select US cities.

 

This may seem like a normal operating business. However, broadcast companies are currently entangled in a lawsuit for Copyright Infringement against Aereo, due to the fact that they are not being compensated for their content being made available to viewers. This money comes in the form of retransmission fees that are paid by the cable companies, to broadcasters in the estimated sum of $4 billion dollars per year. All of the major broadcast companies in the US are currently fighting Aereo in the Supreme Court, which will begin on April 22nd.

 

With a ruling pending, broadcasters are taking a clear stance that Aereo’s business model is illegal and they are in fact stealing the signal and profiting from it. The Whitehouse has also taken a position- standing alongside the broadcasters.

 

Earlier this month, CNet reported that the CBS CEO Les Moonves stated, ‘If Aereo should work, if they should win, which we don’t think is going to happen, we could go OTT with CBS’. OTT refers to ‘over the top’ leveraging the Internet to distribute content through digital means.

 

Aereo will have a tough ride in court as they are taking on all of the major broadcasters in the US and the White House also having taken a position on the matter as well. As this plays out in court, there will most definitely be future scenarios where technology companies look to take on the media and entertainment industry, disrupting normal channels, as well as creating new ones. Clearbridge will be watching how this lawsuit plays out in court so stay tuned.