I agree more often than not with BTIG analyst Rich Greenfield’s industry insights. So I’m surprised to see how impressed he is today with a new product that strikes me as a likely loser: Aereo. The company, backed in part by Barry Diller, just announced that it will go live in New York City on March 14. Residents willing to pay $12 a month will be able to stream signals from local over-the-air TV channels, and watch their shows on demand with the functionality of a 40-hour, dual antenna DVR. The service will only work as long as users are in the local market — not, say, if they’re on a vacation or business trip. Aereo execs expect lots of people to subscribe, perhaps in conjunction with Netflix, as a substitute for the $65 a month cable or satellite TV package. That could be revolutionary, Greenfield writes today in a blog post: “If Aereo is in fact legal, we find it hard to fathom that the traditional (pay TV) bundle will survive and that retrans payments will continue to scale as broadcasters are expecting them to over the next several years.” If he’s right, then it’s the end of the media world as we know it. The giants make most of their profits from the fees they collect for their bundled channels. But Greenfield acknowledges that broadcasters likely will take Aereo to court for selling their services without paying retransmission consent fees. The company hopes to get around that by saying that it has tiny antennas for each customer — users effectively rent them to pick up the free, over-the-air signals that they can receive at home. (That case would be similar to the one that Cablevision successfully made on behalf of its remote storage DVR.) Assuming that Aereo is legal, then you have to wonder: Most people who watch videos on their smartphones or tablets only like to watch for a few minutes, about the length of a typical YouTube clips. How many people will consider it a bargain to pay $144 a year to run their batteries down watching free TV — even with DVR capabilities?
Will $12 Monthly Stream Service For Free TV Alter Media Landscape?
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