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Summary:

Aereo CEO Chet Kanojia wants to disrupt TV pricing again, this time by rolling out movie and news packages at a fraction of the price of traditional ones. News, he said, might even be free.

Aereo’s approach to letting consumers access broadcast TV content on their mobile devices and computers is nothing if not disruptive, and Wednesday at our paidContent Live conference in New York, CEO Chet Kanojia upped the ante even more. Discussing how the company will be able to expand its channel offerings without falling into the old traps of cable pricing, he suggested that a free or low-cost news package is likely on the horizon.

It’s part of a bigger plan to figure out how to address consumers’ base needs first and foremost, before then adding the nice-to-have features for a price. Aereo sees the future of television content as being what Kanojia calls “skinny live, deep library,” so the live parts are only for the content people really need in real time — stuff like news and sports.

“(The consumer is) the one constituent in this industry that’s unserved,” Kanojia said. “Everyone’s businesses are stacked to take advantage of the consumer, not to serve the consumer.”

If on the other hand, the value-add of a movie channel (oh, Aereo’s probably going to add one of those, too) is to watch stuff on your own time, people will probably willing to pay 50 cents or a dollar a month, he said. The same thing goes for programming from, hypothetically, a content provider like Viacom has a broad range of shows that people don’t really need or want to see only while they’re airing.

The only way to do this correctly, though, is to avoid traditional licensing models that have jacked cable prices through the roof and have led to a lot bloat because consumers are getting way more channels than they ever would want to watch. Kanojia wants Aereo to provide 50 percent of the value for 10 percent of the cost of cable, and then let partners and services like Netflix or Amazon Prime fill in the rest.

“The last time I checked,” he joked, “there’s no need to have Desperate Housewives or the Real Housewives of Orange County running on four channels at the same time.”

As for those lawsuits that have plagued the company since its inception, Kanojia said he’s not surprised but he’s disappointed by threats from companies such as Fox and CBS to pull their stations off the public airwaves (the spectrum on which is provided for free because stations are supposed to operate in part in the public interest).

“I just don’t understand the logic behind that,” he said. “I think it’s disappointing to say the least.”

But with significant legal victories already behind it, the future looks a little clearer. He expects the company model could realistically net the company 20 percent of the American television market, and the company is expanding fast outside of New York. It’s supposed to be in 22 more cities by July.

“The one thing that would float by boat more than anything else,” Kanojia said, “is I get a chance to put my product in front of consumers and be judged by the consumers.”

Check out the rest of our paidContent Live 2013 coverage here, and a video embed of the session follows below:


A transcription of the video follows on the next page
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  1. Anyone who claims they’ll use technological advancements to charge less may do that for awhile – especially when they offer so much less content. But at some point they’ll want to maximize profits the same as their predecessors did, and they will because they can. People who believe that technology is going to revolutionize TV so that the public will pay a lot less for it, forget that the public wants their shows and is willing to pay for them.

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    1. Really? Apple has 63% of the music market. Via technological advancements.
      Netflix charges less than cable TV – a lot less. Via technological advancements.

      83% of “the public” that started a new household in 2012 opted to not get a pay TV subscription.

      MVPD’s net gains for subscribers – across ALL of them – in 2012 was under 200,000 – at the same time sVOD services, VOD and EST numbers were up (Per DEG). Internet-only customers are the sole source of subscriber growth for wireline MSO’s.

      Based on Neilsen’s definition of a “TV” household penetration of televisions has been declining for the first time ever, while technological advancements in content delivery increase the audience for lower-cost (and lower margin) content.

      The public is ready, willing and able to pay for shows – that’s what they want.

      What they don’t seem to want anymore is “packages” of content they don’t watch. The vast majority of consumers watch about 16 channels of their 800 channel lineups. Assuming half of those 800 channels are “junk” channels that are redundant or not really programming, that means they are only accessing 4% of the content they are paying for. For cord cutters, technological advances make a lean-back experience for content discovery and consumption much nicer than other options. For those who buy access to content via Apple or Amazon or Vudu, the reality is that they pay only a little less than a full TV package, but it’s their lineup, no commercials and no surreal device/geography restrictions. That’s a behavioral and expectational change brought about by innovation. There’s a whole lot of change coming in the next 36 months, and it’s going to make the music industry transformation look like a mild shift in strategy by comparison.

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      1. Netflix piggybacks on the top of the DVD sales market. The only reason they were able to get their content for less than cable was because the studios were also selling DVDs. But as the DVD market crashes and studios are forced to boost prices, Netflix is buying fewer DVDs and the wait times have gone through the roof.

        Someone has to pay for the production costs. You can’t cut out the rebroadcast fees without the production quality suffering. Perhaps that’s okay and we can make do with fewer CGI effects or actors with less fame, but we’ll pay one way or another.

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  2. I’d love to see Fox and CBS (or any other network) follow through and pull their programming from “over the air”. That would free up a bunch of spectrum for other uses. But in reality, it’s all bluff. The NFL would jerk their broadcast contract if they try to move off of broadcasting. And let’s be honest…the NFL is some of the most-viewed programming their have. They can’t afford to walk away from it.

    Any industry that comes under fire from digital disruption (books, music, newspapers, etc.) talks about how the digital disruptor will drive everyone into ruin. Only companies that cannot adjust to new technologies and disintermediation will be ruined. Those willing to take the plunge and adapt to the times will be successful.

    This is ALL about the carriage fees that broadcasters have become addicted to.

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    1. WhatYouPayForSports Thursday, April 18, 2013

      Rusty: The NFL has already said it stands by its “partnership” with Fox, so I don’t think they’d be so quick to move to another broadcast network. There are only so many companies that could pay $1 billion a year or more to show NFL games, and sports fans by and large already have cable. Maybe that will change by the time the next set of TV contracts expires in 2022, but we’ll see.

      Also, don’t count on spectrum being freed up as a result of Fox and CBS vacating the broadcast space. Nature isn’t the only thing that abhors a vacuum. It’s far more likely that other media companies will step in to create new broadcast networks for local TV stations in search of affiliations.

      On the other hand, perhaps the best way to keep Fox from dismantling its broadcast operations would be to tell Rupert Murdoch that Al Jazeera is launching a new network and looking to take over all of Fox’s affiliates. Wouldn’t THAT raise some eyebrows?

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  3. Free a bunch of spectum? A lot of companies are already sitting on a bunch of spectrum that they don’t even use. So why should we have to give up anything? A lot of us enjoy watching OTA broadcasts and the savings it brings. And not everyone can afford cable you know.

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  4. If you want to have live sreaming content be prepared for a lot of buffering. Someone ask Aero about this.

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  5. The future is almost here…

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