Breezes can stiffen

In April I wrote about Aereo, a relatively new option to receive broadcast television on computing devices. Broadcasters opposed the service, but its technology has been ruled legal by various courts. Speaking about disruption, I noted:

Here’s why this story is so hard to write: it’s always the same. Media incumbents use their positions to raise prices and limit choice. Start-ups employ new approaches, often enabled by an innovative technology, to disrupt the market and serve limited constituencies with more cost-effective options. Incumbents cry foul, litigate and disparage.

The disparagement continues. In a late-July earnings call, CBS president Les Moonves told those listening, "It’s an illegal service that’s stealing our content. We don’t think it’s catching on at all.”

In his coverage, Forbes.com reporter Jeff Bercovici (yes, the same one whose work I wrote about yesterday) repeats Moonves' claim that Aereo is illegal. Bercovici goes on to acknowledge that the assertion "runs counter to the expressed opinions of federal courts that have considered the matter." 

Aereo is just now moving into markets outside of New York, so it may well be true that the service itself is not wildly popular. Whether or not people flock to Aereo, they may be starting to cut the cord, a trend claimed by Todd Spangler in a post on Variety.com:

The number of Americans jettisoning pay TV is still fairly small — but data clearly shows that cord-cutting is picking up the pace as the cost of cable and satellite TV service continues to climb skyward.

In a saturated market with few prospects for growth, television networks increasingly see price hikes as a way to goose revenue. On the margin, higher-priced services can lose subscribers interested in paying only for less of more, or more of less.

Admittedly, 316,000 fewer U.S. pay-TV subscribers in a universe of over 100 million households does seem … small. There's no trend to speak of here. Maybe most or all of the lost subscribers will come back to pay TV next quarter, or next year.

Still, it's worth paying close attention. Speaking of Aereo, Moonves said, “We think it’s a lot more wind than reality”. Breezes can stiffen, though. Just ask newspapers what happened to revenues and prices when Craigslist came to market.

About Brian O'Leary

Founder and principal of Magellan Media Consulting, Brian O’Leary helps enterprises with media and publishing components capitalize on the power of content. A veteran of more than 30 years in the publishing industry and a prolific content producer himself, Brian leverages the breadth and depth of his experience to deliver innovative content solutions.

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