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Broadcasters may have beat back Aereo, but online TV's future is bright

James Careless | July 16, 2014
Broadcast networks may still be celebrating last month's big win where the Supreme Court sided with them in a dispute with online TV service Aereo. But even though the court's decision put a stop to Aereo rebroadcasting network TV content without paying for it--and knocked Aereo out of commission, at least temporarily--don't expect ABC, CBS, Fox, and NBC to spend too time much popping corks. They likely know that winning a battle is not the same as winning the war, and the war for consumer eyeballs between traditional and online TV is just getting started.

One of these is Netflix, which just received 31 Emmy nominations, more than double the amount it got last year. With 13 Emmy nods for House of Cards and another dozen for Orange Is the New Black, it's clear that the Big Four networks and pay-cable channels like HBO are no longer the only places you can find quality programming. Add the growing investments by Amazon, Google, and Yahoo in the online TV space — Yahoo recently snapped up the cult TV show Community from NBC, for example — and it's clear that online services are getting serious about siphoning off broadcast TV's audience.

It's the same pattern that played out 60 years ago when upstart TV networks were trying to capture radio's audiences by adapting popular radio programs for the small screen. In other words, the networks gave viewers what they wanted, which in this case was their favorite radio shows with pictures.

Back in the present, online TV is just broadcast TV delivered by another means, rather than being something radically different, as broadcast TV was in comparison to radio. But there's no reason that Netflix, Amazon, Google, and Yahoo can't succeed in dethroning broadcast TV by giving viewers what they want, especially with broadcasters helping to drive their customers away by indirectly pushing up cable rates.

Cable concerns

And make no mistake: People hate their cable service, if a 2014 Cable Industry Brand Vulnerability survey conducted by management consulting firm cg42 is anything to go by. "Seventy-three percent of those surveyed feel that cable companies are predatory in their practices and take advantage of the consumers' lack of choice," said Stephen Beck, cg42's managing partner. "Sixty-nine percent feel that there is too little competition between among TV/entertainment content providers, and 53 percent would leave their cable company if they felt they actually had a choice."

So how do TV broadcasters fit into this mix? Well, one major reason cable rates are so high is due to the copyright fees demanded by broadcasters and the cable-only channels (HBO, ESPN, and so forth). Truth be told, some cable TV companies would probably be happy to charge subscribers less if they could, and to only charge customers for their channels they want — if only the broadcasters and cable-only content providers would let them. But that doesn't look likely to happen.

The Big Picture: Aereo's apparent end means virtually nothing to the advancement of online TV. At best, the Supreme Court decision is an indicator to online TV companies of a pitfall to be avoided — nothing more.

In contrast, the public's seething anger with rising cable TV rates — and broadcasters' complicity in those hikes — is likely to make a difference. After all, the big driver behind Netflix isn't just its content, but its compartively low $8-a-month entry price. Right now, people are willing to put up with cable and network broadcasters because they seem to have most of the "good stuff." But this can change; in fact, as Netflix has already proven, it is changing now.


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