• by Mike Bloxham , Op-Ed Contributor, April 24, 2014

While all eyes are on the Supreme Court and the battle between Aereo and the broadcast community, it’s worth remembering that Aereo itself isn’t the issue.
 
At its heart, the case is about the ability of those that benefit from the status quo to protect their business models and preserve the orthodoxy in the face of potentially disruptive innovation that could negatively impact their revenues and their place in the industry hierarchy.
 
Aereo has clearly rattled the cage, and there are questions of copyright that do indeed need to be addressed. But my guess is that the bigger picture here is about ensuring innovation doesn’t run too far ahead of the broadcasters, which want to retain their position of dominance as the market evolves.
 
Broadcasters are already feeling pressure from Netflix and Amazon, and there are a number of others ranging from Apple, Sony (Crackle) and AT&T (with the new investment from Peter Chernin for a streaming venture). On the content side, we’ve recently seen the WWE commit fully to distribution via streaming, effectively cutting “TV” out of the equation altogether.
 
Hulu may be owned and controlled by broadcasters, thereby giving some of them a stake in the streaming game, but with the service having been reviewed for sale in recent times, the long-term commitment to it has to be questioned.
 
Many in the broadcast world believe that long-term, these evolving distribution models will need to be embraced more fully.  The amount of time-shifted viewing continues to increase via various means, be it on demand, DVR, OTT, online etc.. There is nothing to suggest this increase will slow any time soon.
 
In that scenario, one has to ask: How the major networks will adapt their businesses to profit in a world where the majority of prime-time viewing is time-shifted?
 
Will they hedge their bets and up their commitment to streaming services?  Or will they find that more entities like the WWE choose to go it alone and strike deals with OTT providers?  Will we see affiliate stations jump ship and align with Netflix, or will some of them simply go independent and double down on local/regional news with national and international content coming from AP or Reuters?
 
Either way, Aereo represents yet another threat to the historic — and profitable — models of distribution that the current players could do without.
 
The whole scenario reminds me of the emergence of the first DVR.  Remember Replay — the one that enabled you to skip entire ad breaks at the press of a button?  That business was eventually driven offshore and into obscurity by the broadcast community.  But — as we well know — the DVR (with ad-skipping reduced to fast-forward) stuck around as a device and has come to be a central part of TV consumption today.
 
The same fate may befall Aereo.

The Supreme Court may write it out of existence — assuming it can do so without putting a thick red line through all cloud-based video innovation in the process.  But it’s highly likely that even if that is the case, the principal that lies behind Aereo will live on through another business yet to be rolled out. 

Or perhaps more likely, Comcast will seeks to take advantage of the economic promise of a cloud-based distribution system. In which case, the consumer is unlikely to feel the benefit, but both MVPDs and networks will have kept their hands on the wheel and will be able to profit accordingly.
 
So it’s not about the model so much as it is about who controls the model.
 

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