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Why Aereo's Loss Hurts the TV Industrial Complex in the Long Run

Aereo could have forced the TV guys to move faster into the future. Back to business as usual, which will be a problem in the long run.

Peter Kafka covers media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.

So it looks like Aereo will have to fold up the tent. What else will happen in the wake of the Supreme Court’s decision today?


Which is a problem, both for consumers and for the media companies celebrating their victory today.

I’ve always been skeptical that Aereo would succeed, even with the Supreme Court’s blessing: I found it hard to imagine that there was a mass market for a service that only provided access to broadcast TV channels, when the stuff that so many people want to watch isn’t on broadcast TV.

Still, a Supreme Court victory for Aereo might have done a lot to move the TV industry into the future at a rapid clip, instead of its plodding pace.

At a minimum, Aereo could have forced the TV networks and pay-TV providers, who take billions per year from TV subscribers, to let those subscribers watch the shows they pay for, whenever they want to watch them, wherever they want to watch them.

The TV Industrial Complex has signed on to that idea — but only in theory. “TV Everywhere” launched in 2009, but five years later it remains a confusing patchwork of biz dev deals that befuddle most regular people: Depending on which pay-TV provider you use, you may be able to get some shows, from some networks, on some devices, sometimes. Good luck figuring it out.

But the main beef most people have with pay TV isn’t their inability to stream “CSI” on their cell phones. It’s that they have to pay big monthly fees for pay TV, whether they want 5 channels or 50.

And that’s what Aereo’s Chet Kanojia and IAC’s Barry Diller, who backed the company, were most interested in — a service that would essentially offer a very skinny bundle of TV networks, and provoke the other guys into rethinking their bundles.

It wouldn’t have happened overnight, because the networks and the pay-TV guys are locked into long-term deals that prevent anything from happening overnight. And like I said, I don’t think Aereo would get a ton of pickup for its particular bundle.

But Aereo’s legalized presence would certainly give the networks and providers a reason to move much faster to provide their own specialized packages. Not “a la carte” TV, where a TV subscriber can sign up for Disney and Comedy Central, but not ESPN and MTV. But at least a slimmed-down offering with a range of options and prices. A few people are playing at the margins of this idea — but only in a way that protects their core businesses.

Now we’re back to a world where the only incentive the TV guys have to move faster is the nagging fear that their growth has permanently stalled, and that their subscription rolls will decline as new generations of video-watchers enter a world where paying for TV seems ridiculous.

That group of “cord-nevers” hasn’t grown big enough to show up on the TV Industrial Complex’s books yet. But it’s hard to imagine it won’t get there. Any sane TV executive knows that, and is also betting that it won’t show up for years to come, when it will be someone else’s problem.

If Aereo were around to make them move faster, it could be better for them — and their customers — in the long run. But they’ll be sticking with lucrative business as usual for now. Pretty sure we’ve seen this show before.

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