As streaming TV startup Aereo goes before the Supreme Court on April 22, it is important to keep perspective on how the case can impact the U.S. television industry, and the history of its legal disputes. The company provides access to public television shows by recording programming via individual antennae that are prescribed to individual users, and delivering programming to users through its recordings. The argument is over how Aereo performs such operations without paying retransmission fees to broadcasters. Aereo claims it is legally able to do so as per a provision of copyright law that allows individual users themselves to record programming for private performances. Several state courts have already ruled in favor of Aereo.
VISUAL CONTEXT: FUTURE CORD CUTTERS
As it was announced four months ago that Aereo’s case would finally reach the ears of the Supreme Court, Aereo’s executives welcomed the challenge while broadcasters have spent the meantime making dramatic threats over what they will do should Aereo win. Among them has been CBS’s CEO and President Leslie Moonves who has stated that an Aereo win would cause CBS to move to a subscription-based model of TV packaging so the company can retain its content copyrights. (Ironically, the subscription-based model is what its competitors like Netflix use.)
The real threat is not Aereo’s business, alone. In order for Aereo to entirely break the mold of traditional broadcasting, it would first need to blanket the U.S. with coverage. So far it has covered about a dozen U.S. cities with its unique streaming technology. But to truly threaten broadcasting networks, it is going to have to gain far more coverage — something that is still a ways off for the company.
So the claims that Aereo will overturn the U.S. TV market with a win in the Supreme Court are a bit dramatic. Rather, the shifting of the U.S. TV industry has already happened, and will continue to happen as long as streaming video services remain popular. Not only do services such as Netflix and Hulu make watching TV and movies less expensive for users, they pair that lowered cost with ease-of-use across devices. Aereo — while hosting no archive of popular movies or TV shows like the former two services — takes a stab at what is suspected to be the last stronghold of the broadcasting industry: sports.
It is feasible, that users of the future will drop cable at faster speeds than they already are and subscribe to combinations of high-speed internet, Netflix, and Aereo to get all that they want to watch across all devices. But recent numbers suggest there may be more of a balance between large numbers of defectors from cable and those who still use broadcasting services. Analysis from Experian Marketing Services shows that cord cutters have increased in the U.S. by 44% over three years, and 6.5% of U.S. households forsook their cable packages in 2013. But some broadcasters continue to do well despite the numbers of cord cutters. Comcast’s last two quarters of reported revenue actually showed an increase in video subscribers — highly unusual in a market environment that has not favored broadcaster video subscriber growth since the inception of online streaming video.
The TV landscape is still anyone’s game. Regardless of Aereo’s fate in the Supreme Court, the tables have already turned for U.S. television users and providers.