Aereo signals cloudy future for broadcast TV

Aereo signals cloudy future for broadcast TV

Summary: Whether the New York-based streaming remote DVR service lives or dies at the hand of the Supreme Court, the future for television programming is firmly seated in the Cloud.

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Assuming the original programming created by the networks becomes avaliable only to content providers, what exactly does that mean for monetization? How does advertising work? How does a network or a content producer evaluate ratings when time slots become irrelevant?

I pondered some of these things four years ago when Conan O'Brien and Jay Leno became the subject of a highly publicised kerfuffle regarding their employment contracts, ratings, and schedule shifting of The Tonight Show.

Here's the juicy bits of that article which I beleive are still relevant today:

Ratings will no longer be about timeslots, but about the number of downloads and targeted audiences, and the metrics that content providers will be able to gather and data mine will be tremendous. Suddenly, NBC will realize that 70 percent of what gets shown on Saturday Night Live sucks ass, and they'll be able to do sophisticated trends analysis to tell them to ditch the consistently stupid skits and the people that produce them or star in them, because they'll know exactly when people tune in and tune out to very granular levels of detail.

Produced television content will have to survive based on raw viewership and downloads, not by what time slot they occupy. The success of television programming in 2016 will be measured not unlike the way we measure the success of New Media today. Old Media Television will have to adapt to an instantaneous gratification model, or die.

Of course back in 2010, Cloud Computing as well as Big Data were not industry buzzwords as they are now. But I understood even four years ago that such technologies would be critical to move television into the 21st century.

Will the TV broadcast industry cease to exist and go "Over the Top", as Les Moonves predicts? 

Rapid provisioning (and de-provisioning) of servers and storage to provide geo-redundant capacity for the content streaming is one part of the equation, certainly. No television network will want to pay for spare datacenter capacity and the CAPEX and OPEX that goes along with it when they can just buy it on demand as a cheap utility from their choice of Cloud providers.

Sophisticated analysis and Big Data decision making tools will guide the networks in how to target advertising to who is viewing that streamed content, providing more of a precision guided muniton to the eyeballs than the shotgun blast that they have today. 

For the advertisers, that's way better than the tools they have now. Today all they have is time slots, ratings and audience popularity based on Neilsen and perhaps DVR data, as well as local demographics. 

All of that is legacy technology and vestigial old school business when Over-the-Air is gone. Depending on the viewer, who will be profiled based on their social network footprint and historical viewing data supplied by all of their content providers (presumably through business partnerships) they will receive customized TV ads dynamically inserted into their streams. And they will be told what other programs to watch.

Nothing will be DVRed, as content will be dropped onto the CDNs for the content provider as soon as it is ready and the endpoints will only need enough local storage for an encrypted stream cache, eliminating a great deal of content piracy. And it will be difficult to bypass embedded advertisements in some cases depending on how the content was licensed. 

If the activities of the NSA snooping on your emails and phone call history creep you out, just think about what the networks are going to do with the information that details what you like and do not like to watch, what parts of it you liked or disliked, all of your favorite things on Facebook, what you've been saying on Twitter, what websites you look at, what products you've been buying, what books you read and what games and music you play on your devices.   

One thing is for certain. Aereo will be a mere footnote in a decade hence, a long-forgotten startup that made a poor bet that the industry it used for the basis of its offerings would not adapt to the changing lifestyle and technology preferences of its content consumers. 

Will the TV broadcast industry cease to exist and go "Over the Top", as Les Moonves predicts? Talk Back and Let Me Know.

Topics: Cloud, Networking, Storage, After Hours

About

Jason Perlow, Sr. Technology Editor at ZDNet, is a technologist with over two decades of experience integrating large heterogeneous multi-vendor computing environments in Fortune 500 companies. Jason is currently a Partner Technology Strategist with Microsoft Corp. His expressed views do not necessarily represent those of his employer.

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Talkback

108 comments
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  • 2 Cents

    I was sad to read that you would not put your opinion "out there" as to who is right/wrong. I'm not afraid of doing that.

    I believe Aereo will be found to be doing business legally. Their business is not based on"stealing" content. Their business is based on renting out antennas. The content, and the advertising that is emmbeded in the content, is seen by the end user and can't be skipped (when watched in real-time). The broadcasters glaze over this fact. The reality is that Aereo is making an over-the-air broadcast worth more because it is reaching more people. That means the advertising is reaching more people and why wouldn't the broadcasters want to their customers (those purchasing ads) reach as many people as possible? That means better response which in turn means the ads are more valuable. If the ads are more valuable then broadcasters should be able to charge more for them.

    What content providers are really upset about is that it's another nail in cable coffin. While over-the-air maybe in trouble, it's the cable providers who are really hurting. Why do you think Internet costs $100/mo and Internet+cable costs $112/mo?

    On demand with actual statistics about which shows are working and which aren't - rather than relying on some estimation based on a shady "Nealson" rating takes the power out of the hands of the broadcasters and into the hands of the consumers. Netflix is the model of the future. Broadcasters hate this... how can they bundle their crap if you pay for what you actually want?
    ChronoFish
    • Cable

      I agree that Aereo hurts cable more than broadcast. Cable needs subscribers and any reason for one not to subscribe hurts them directly. Also, cable requires a direct connection to the subscriber and often onsite equipment beyond the TV. Broadcast needs viewers but since they are not using wires to connect with the viewers they are only dependent on people have TVs. Aereo is providing higher quality signals and possibly an enlarged geographical reach for the broadcast signal. Aereo requires a fast internet connection to work.

      Moonvies is mouthing off like an idiot to scare people into thinking they are going to lose broadcast TV because of this case.
      Linux_Lurker
      • Spot on Linux lurker

        Moon beam needs to short his cable TV stocks he owns and enjoy his monetary gains from that and his higher ad revenues.

        What a whining pathetic dimwit moon beam is.
        Yeah I know his real name is moonvies but I just couldn't resist giving that putz a nick name for fun.
        Luke-IT
    • Greed

      ChronoFish has it right. The broadcast industry's argument is largely bogus. The existence of Aereo does not alter any OTA broadcast. It merely enlarges the potential audience, and thus the potential viewers of the ads that finance the broadcast. Thus, there is no reason for broadcasts to "go dark". The suggestion that a decision favoring Aereo will lead to the end of OTA broadcasting is merely an attempt to create FUD (fear-uncertainty-doubt).

      To understand this case, simply do as Deep Throat instructed many years ago: Follow the money.

      Broadcasters who are seening their OTA market decline want to extract revenue from Aereo in an effort to maintain their lucrative businesses a little while longer.

      The cable companies, in contrast, are fighting because they likely will loose subscribers to Aereo. However, a decision in favor of Aereo might help the cable companies to hold steady, or perhaps reduce, the right-to-carry fees paid to the broadcasters. That, of course, would hit the broadcasters where it hurts.

      The broadcasters' real problem is that the world is changing around them, and the business model that provided them with riches for decades is failing. So, it is understandable that the industry is frightened, but Aereo really isn't the problem. It's us. We the viewers are demanding that TV be served up the way we want it, not as the industry wants to provide it.
      Dogcatcher
      • No, you're wrong about increased revenue for OTA networks

        Dogcatcher wrote:
        " The existence of Aereo does not alter any OTA broadcast. It merely enlarges the potential audience, and thus the potential viewers of the ads that finance the broadcast."
        ===
        Wrong. Did you miss the part that states, 'The broadcast TV content is then recorded to "Remote DVRs"' Guess what you can do with DVRs. Yep, Fast Forward past commercials. Past studies with VCRs and Tivo showed that there was a marked decrease in ad exposure. This is why many free/basic On Demand services, i.e. Time Warner's Start Over, only allows user to Rewind, but not Fast Forward. Services that do allow Fast Forwarding generally charge an additional fee, i.e. DVR rental, of which a percentage goes to the networks.

        If Aereo allows free Fast Forwarding past commercials, do you seriously believe that MORE people will watch the ads than in a world without Aereo? That can only happen if potential Aereo subscribers don't ALREADY watch the networks -- which doesn't make sense. Chances are that they already watch OTA TV or cable/satellite. As such, ad exposure can only go down via Fast Forwarding. I'm seriously puzzled as to why you think that someone who doesn't watch the networks now (for FREE) would suddenly do so just because Aereo exists. Just where is this increased ad viewership coming from?

        So yes, the OTA networks should feel threatened since ads are how they make money. This isn't the UK, where citizens pay a television fee. Our OTA TV is free because of ads. As a secondary revenue stream, the networks get licensing fees from cable and satellite companies who choose to carry their channels. Aereo not only won't pay a fee, but they will also diminish ad exposure. A double whammy. Does that seem fair?
        sdc100
        • OTA is local

          That only make a small difference in their local market no big deal. Go out of business? That spectrum is so freaking valuable it is unthinkable. It was a sin to allow it to exist.
          Altotus
        • Windows Media Center Also Records.

          sdc100

          Over the air broadcast can be recorded anyway. I do it all the time with Windows Media Center. I can then zip through the commercials.
          lloydkuhnle
        • Anyone can get a DVR and skip commercials

          That part is irrelevant to Aereo. Aereo was providing antennas to people who were not picking up OTA. So, no, it is not about fast forwarding.
          grayknight
      • Cox is scared of AERO

        Cox recently sent out questionnaire about what their customers saw for the future of how content is delivered. The questionnaire was designed to gauge if their customers knew about alternatives even going so far as to ask about AERO multiple times and then determine how likely we would be to cut the cord. As Dogcatcher said, believe broadcast would benefit by this. For the cable companies that are bleeding us dry... Well, enough said.
        Keeping Current
    • What about local vs. national commercials?

      I'll start by saying that I'm not an Aereo user and don't know the details of how it works. So, please feel free to correct me if and where I'm off base. That said, aside from territory protection, I suspect the networks are worried about damaging relationships with their advertisers. I understand that commercials broadcast along with programming are recorded as well and must also be watched by the viewers.

      But what about commercials from local rather than national advertisers? These will be different from market to market. Not sure if this is addressed in the Aereo model/process, but if not then I can see why advertisers and networks would have concerns. For instance, what if the Aereo feed for "CSI: Poughkeepsie" is recorded in New York and also delivered to Aereo users in other markets? Those commercials (including local ones) would indeed be seen by a larger audience, the local ads for, say, Los Angeles could end up being seen by a much smaller one.

      Again, I'm not an Aereo user, so maybe it doesn't work this way. Just thinking out loud.
      weslymoore
      • Aereo service is constrained within each broadcast locality

        To legally & functionally replicate the situation of a person using a home TV antenna, Aereo carefully restricts their service areas. There is no "national" Aereo TV service.
        SlimSam
        • Not really...

          It's been disclosed that Aereo doesn't really do any geographic restrictions. The user clicks a button attesting that they are in that market, and that's it. If the user lies, Aereo does nothing about it.
          IowaTVMan
          • Yes, really...

            Aereo actually does restrict by geographical location, but via two methods. Yes, the user attests to their location by entering a zip code, but then Aereo then performs an IP address check and either allows or denys account creation based on a geographical location match of zip code and IP address.
            DrChrisE
      • What about local vs. national commercials?

        Aereo sends you the same exact content that you would receive over the air. If you're in the NYC market, you see whatever the local NYC TV stations are broadcasting. There is no "Aereo feed"- there's just a broadcast signal, received over the Internet rather than over the air.
        bsheehan3
      • Ad Content

        The ads seen are the ones broadcast with the programming by the local affiliate. Some are local, sold by the affiliate, and others are national, sold by the network. Aereo does not have any ads.
        Linux_Lurker
        • For now...

          If Aereo is held to be legal (unlikely), there's nothing stopping them from stripping local spots and inserting their own.
          IowaTVMan
    • IS IT ABOUT THE MONEY?

      There seem to be many bizarre contradictions and ironies about the way television is delivered to consumers today. Over-the-air broadcasters have umpteen-zillion-watt transmitters to send their programs for FREE to the small percentage of viewers with an antenna in CRYSTAL-CLEAR HIGH DEFINITION from an antenna! Then the broadcasters get paid by cable and satellite providers for the right to rebroadcast their content. In turn, cable and satellite send out the inferior standard-def signals to their customers or charge extra for high-def! Is the next step to go after antenna manufacturers?
      bf321
      • I don't know where you are, but "crystal clear" it is not.

        I happen to be in a borderland area between Washington DC, Baltimore (and south of both).

        The signals come in... but with a lot of dropouts - which leaves holes on the screen, stuttering voices, or no picture with voices, or no voice...

        When the weather is good, the signals are MOSTLY ok (there are 5 stations that come in good in the winter, not at all in the summer).

        Yes, a bigger antenna would fix some (if not all) of the problems.

        But this area doesn't want big honking TV antenna reflectors (outside 18 inch is the limit I believe).
        jessepollard
        • It doesn't matter

          ...what your "area" (political jurisdiction) wants. The FCC long ago preempted local laws and deed restrictions that prevent people from installing whatever kind of antenna is necessary to receive a broadcast TV signal. The exception is apartment buildings, where a tenant does not have access to a rooftop.

          So any local ordinance that restricts the size of an antenna is illegal.
          IowaTVMan
        • Inexpensive antenna arrays

          If you have an attic you build a small array with 3 or 4 high gain antennas. Will clean your signal up quite nicely. You won't get A&E, SyFy, etc. but you will also save $100 a month. Don't know about you but I could use $1,200 a year back in my wallet.
          Keeping Current