Broadcasters, Here’s How to Kill Aereo. Cable Providers, Here’s How to Make People Hate You Less.

How to improve the lives of media companies, service providers, technology companies and the consumers who are trapped in the middle of all this nonsense.

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“Can we watch this upstairs?” It’s a question my wife asks several times each week. We recently moved and are trying the whole no-TV-set-in-the-bedroom thing. We subscribe to Comcast for a combined $180 per month for internet and cable, TiVo for $13 a month, Amazon Prime for $79 per year ($6.58 per month), Netflix for $8 per month, Hulu Plus for $8 per month and Aereo for $8 per month.

Despite spending well north of $200 a month on all this, the answer to whether we can watch something in a room in our house using anything other than a traditional TV set and cable box isn’t always yes.

The Tech Industry Is Looking to Capitalize On Consumer Frustration

The tech industry is looking to change all this, of course, with reports this week about how Google, Apple, Intel and others are trying to get media companies to make programming available over the top of traditional delivery methods. The Wall Street Journal article that prompted much of the slew of news this week, however, concedes, “There is no guarantee Google, or any of the technology companies, will be able to strike licensing deals.”

Licensing deals cost money, and big technology companies have lots and lots of money. They’ll need to decide if they’re willing to shell out the kind of money it would take for media companies to extend deals beyond the scope of cable companies and satellite providers, outraging said providers – oftentimes monopolies in many areas – in the process.

Content Bundling: The Price You Pay for Channels You Don’t Watch

Taking technology companies out of the equation for a second, we have two sides here: media companies (ABC, CBS, ESPN, HBO and the like) and service providers (Comcast, Time Warner Cable, Dish, DirecTV and the like). Media companies and service providers have a mostly cozy, but sometimes uneasy relationship.

Media companies sell bundles of channels of content to providers, which turn around and sell them to you and me. Regular people like you and me wonder why we can’t just buy the channels we want. We want a la carte cable and satellite programming, but certain low-performing channels have to be sold in bundles with popular channels in order to make it worth it to keep the low-performing stuff alive. I’d submit that buying episodes directly from places like iTunes and Amazon are as close as we’re going to get to a la carte programming for a while. Whatever the case, what I’m writing here won’t try to come up with a solution for true a la carte programming. Sorry.

Bundling is a very real problem, though. Sports channels “account for 19.5% of fees paid by cable and satellite operators,” according to a recent Wall Street Journal report titled Cable Providers Revolt Over Sports Costs. Revolt! That’s the uneasy part of the relationship. The prices charged by the media companies seem to keep going up, which are eventually passed along to you and me as higher monthly bills from our service providers.

So we have media companies dancing with service providers, as prices to consumers keep going up. Despite a few spats here and there, though, the media companies and service providers appear to be happy with this arrangement. At least, neither side is unhappy enough to truly revolt for any extended period of time.

The Relationship Between Tech, Media and Providers

Now, throw technology into the mix – technology being disruptive by nature, and with a tendency to lower the prices of things – and media companies and service providers get a little squeamish.

Broadcast media companies like ABC, CBS, Fox and NBC don’t like stuff like Aereo (we’ll get to that in a minute) or piracy. Meanwhile, service providers like Comcast and Time Warner Cable don’t like technology companies like Netflix striking deals for content directly with the media companies and only charging people $8 a month.

Media companies are also leery of tech companies like Netflix for producing shows on its own. If you’re Netflix, why deal with a media company when you can just make your own shows and scoop up a bunch of Emmy nominations, right? Media companies should also be leery of Google, which makes a lot of money from advertising, just like the media companies do.

There are three sides here, each with two arms holding a gun in each hand, each hand trained on the other two. Nobody’s going to shoot, but nobody trusts that nobody else is going to shoot.

Anyway, here are some ways to get out of this mess in the short-term or, at the very least, improve the lives of media companies, service providers, technology companies and the consumers who are trapped in the middle of all this nonsense.

For Broadcasters: How to Kill Aereo

The fact that a company like Aereo even exists is the ultimate showcase of how screwed up everything is. And I say that as someone who pays $8 a month for Aereo here in Boston and enjoys the service.

Fox has been throwing an absolute tantrum about Aereo. ABC, CBS and NBC have gotten in on the legal action as well. Why? As my colleague Sam Gustin explains:

Aereo has spooked the major broadcasters by using a new twist on an old fashioned technology to test the TV industry’s iron-clad grip on broadcast television. Aereo picks up free, over-the-air broadcast signals using an array of tiny antennas — each antenna “leased” to a single customer — and then sends those signals to customers via the Internet. Aereo pays nothing to perform this service, but it charges its customers for each tiny antenna, which the company houses in nearby “antenna farms.”

[image] Aereo antennae

Aereo

Aereo’s tiny antennae, which pluck TV signals out of the air and redirect them over the Internet

That’s right. My $8 a month is paying for a tiny TV antenna in a warehouse somewhere, which pulls in local stations and then sends them back to me over the internet so I can watch TV on my iPad. Again, how screwed up is everything that, in 2013, it’s come to this?

ABC, CBS, Fox and NBC, you have a couple options here.

First — and this is going to sound crazy — do this yourself. It’s not rocket science. What’s more, do it without all the weird antenna-in-a-warehouse stuff. Make your live broadcasts available directly through the internet. Band together and make a service like some of you banded together to make Hulu. A Hulu for live broadcast TV, if you will.

Then make it free just like how your stuff is delivered through the air for free, and offer $5- and $10-a-month premium access packages matching all the features Aereo is offering in its $8 and $12 packages.

If you can’t figure out how to do this yourselves, then bite the bullet and buy Aereo before it gets any bigger. You know you want to bury Aereo, though. This would do it overnight.

Your second option would be to rely on the service providers to do the same thing but at a larger scale, making all channels – not just broadcast channels – available with Aereo-like simplicity. Which brings us to…

For Cable Providers: How to Make People Hate You Less

Cable companies, you guys are somehow less popular than airlines. That’s truly remarkable.

Your biggest problem is lack of competition, of course, but that’s all going to change if Google and Intel and Apple and all these other tech companies break out their wallets aggressively enough. Companies like Netflix and Amazon are already giving you a headache by fostering the cord-cutting movement, but it could get a lot worse.

Get out in front of this.

If I’m paying $180 for cable TV and internet from Comcast, Comcast should allow me to watch the cable TV I’m paying for over the internet connection I’m also paying for, live on any device and anywhere in the world. Follow Dish’s lead here, but take things further by making your content available to any device that wants to grab onto it. You’re on the right track with these types of Xbox and apparent Apple TV deals — keep going, though. Floor it.

Web services and various other software have application programming interfaces (APIs) that let developers build apps that can interact with these services. Work with the media companies to turn content into a grand API of sorts that tech companies can universally tap into and build interfaces around. You guys have proven time and time again that you don’t understand how to build proper interfaces. Leave it to the pros.

Control the API so that content is only displayed to paying customers who log in with their Comcast or Time Warner Cable credentials, of course. Whatever you do, don’t wait for these same tech companies to strike deals directly with the media companies instead. They want to build stuff around the content, but since you won’t let them, they’re trying to buy the content directly. Once you lose control of your content, it’s over.

And while you’re at it, work with the media companies to make their back catalogs more widely available through this pipe of yours, too – again, only to paying customers — which would greatly diminish the appeal of subscribing to Netflix. It might – just might – cut down on piracy in the process as well.

I grumble about paying $180 + $13 + $6.58 + $8 + $8 + $8 every month, but I’d grumble a lot less if I just paid $180 and didn’t have to worry about all the different ways to get the same content onto different devices at different times. Lower my bill by not making me pay for arbitrary cable boxes and I might be downright happy. I certainly wouldn’t be tempted to equate Comcast with Delta – that’s for sure.

5 comments
MYOFFICES
MYOFFICES

Aereo is a location based access point offering a viable challenge to the broadcasters. Tvonthego.com is another one of these upstarts ready to uproot the market. With a location based tv system and new innovative original content in development all it takes is one hit. Once the eyeballs go the pocket books come after. AEREO here they go.

CharlesBoyer
CharlesBoyer

Media distributors are all about lock-in and control, and the pitch a fit every time a new technology comes along that loosens their iron fist.  VCR's, DVR's, CDR, DVDR, even personal computers were hated by the cable companies and broadcast entities.  Radio didn't care for cassette tapes and of course the whole digital shift.  As for DVR for your radio, forget it being mass marketed, the RIAA and NAB nipped that right in the bud.

And consumers have rebelled to the point of saying "the hell with the law" and going their own way.

All of that makes me wonder if TV and radio media companies made horse buggies and whips in the 19th century.

BobBlock
BobBlock

Well written. Now, you say that 19.5% of fees paid by providers go for sports. What % of viewing time is on sports?

pauljunior
pauljunior

i got rid of comcast and use netflix, hulu and areo in its place. i don't understand why media companies are so against aereo. it's the exact same stuff i'd get if i turned of my roku and plugged in my $10 antenna from best buy. the only difference is there's dvr functionality. and for media companies, that's actually a GOOD thing. because areo's dvr is cloud based, it's the FIRST time i've ever used a dvr and don't fast forward through the commercials. since you don't know where you are in the program it doesn't make sense to try. media companies make shows so that advertisers will pay. the ONLY other time i come even remotely close to watching a commercial is when on hulu. it's only 2 so i don't mind. 

tsteele
tsteele

If the broadcast networks provide this, they'll face revolt from their affiliates who would effectively be shut out from delivering commercials and promos to viewers in their markets (and, since the networks make tons of money from their owned local stations, it would affect their own bottom line as well). This could be addressed by a modified form of Aereo's service, in which I can get KABC's feed if I live in LA, but I can't get WABC out of New York.

If cable/satellite companies provide this service you suggest, they're effectively giving up the ability to extract extra fees from customers for multiple boxes.  When was the last time a cable company cut fees?

Neither concern is a dealbreaker, but provide the context as to why this service isn't offered even though it would be of obvious value.  Also, it should be noted that the vast majority of customers still don't use computers/internet devices to watch TV; networks are reluctant to alienate their main delivery channel (local stations) all to compete over a relative sliver of the market.  Yes, that sliver is eventually going to be the entire pie, but it's still not today.  The tension between risk and reward is what creates opportunities for the Aereos of the world.