Disney's ABC Targets Aereo With Free Live Streaming
Aereo, a technology company that re-transmits over-the-air signals to multiple devices of its subscribers, has been in the limelight for its legal status since its inception last year. While broadcasters have been in a legal battle against the company over copyright infringement, Aereo continues to expand its operations geographically.
In light of the recent ruling by an U.S. appeals court, which favored Aereo, broadcasters are weighing different strategies to counter this new technology which can mark an end to the concept of a re-transmission consent fee. Disney ( DIS ) has taken an aggressive approach and recently announced free live streaming over its apps on multiple devices, which it will later limit to pay-TV subscribers.
Live Streaming of ABC
Starting this week, Disney's ABC will begin live streaming of its entire programming schedule. Streaming will be available on its app for tablets and smartphones in New York City and Philadelphia for now. This feature will be free to start with, but come July, Disney plans to limit the service to authenticated pay-TV subscribers. Subscribers will then have to use their pay-TV accounts to connect to the stream.
The penetration of tablet and smartphones has increased in the U.S., which has led to a change in customer preference of watching television remotely, rather than just at home. The pay-TV operators are building on the concept of 'TV Everywhere', which will allow subscribers to access content on multiple devices remotely. However, Disney's move is the first instance of any broadcaster offering 24 hours of live streaming.
Aereo offers live as well as time-shifted viewing of over-the-air channels. Its target customers are cord-cutters who don't want to pay expensive cable bills or the ones who wish to access entertainment content remotely. The broadcasters such as Newscorp's ( NWS ) Fox, Disney' ABC and Comcast's ( CMCSA ) NBCUniversal have made an unsuccessful attempt to shut down Aereo, as an appeals court denied such injunction in the 2 nd circuit.
While the broadcasters claim that the Aereo is stealing their signal and re-transmitting it to public resulting in copyright infringement, Aereo claims it is using freely available over-the-air signals through tiny antennas and transmitting it only to its subscribers. ABC on the other hand will be using much cheaper cloud technology to deliver its live stream unlike Aereo's setup of tiny antennas. It is clear that the feud between the broadcasters and Aereo will continue for some time and the Supreme Court may intervene at some stage. Until then Aereo continues to expand geographically.
This move by Disney could well start a trend where the broadcasting networks will be available freely for streaming thereby limiting the growth of Aereo.
Is It All About Re-transmission Consent?
Re-transmission consent refers to the provision that requires cable and MSOs (multi-service operators) to obtain permission from broadcasters before carrying their programming. Usually these operators would pay cash to the broadcasters in exchange of carrying their programming. If Aereo's business model wins the legal battle then it could open the door for other pay-TV operators either to partner with Aereo or create a similar technology of their own, thereby bypassing the need to pay any re-transmission consent fee.
The re-transmission consent fee is estimated to surpass $6 billion by 2018, and so there is clear reasons for broadcasters to go after Aereo. Time Warner ( TWX ) recently stated that it would start an Aereo like service if its legal status becomes more convincing. It will be interesting to see how broadcasters respond in this feud against Aereo. While ABC is starting its own streaming, Newcorp's Fox has threatened to transform into a cable only channel.
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