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In case you missed it -- and I hope you did not -- yesterday I had a piece on Time Warner (News - Alert) Cable putting out a beta version of software that will allow subscribers to view television basically on any device they can wirelessly hook up to their in-home subscriber equipment.  In that one I remarked that Slingbox needed to take note. Yesterday was also was a day of note on another matter relating to the future of television.   None other than Barry Diller, he who created the Fox Television network and made home shopping networks a staple of modern life, revealed that his company IAC/InterActive Corp. was introducing a new service in New York, Aereo on March 14. It is designed to free local TV channels from the, “closed cable-broadcast-satellite circle.”

An Aereo in the quiver

What is Aereo? In a nutshell, it is an Internet-based service that will stream all of the programming of local TV stations to any screen you have in your home — smartphone, PC, tablet, Kindle, Internet-connected TV — for $12 per month. This is a fraction of the cost of full cable TV service and well below the cost of basic cable in New York. What it means is that for those who don’t watch premium cable programming and are hooked on things like Netflix and Hulu (News - Alert) but want local content can be freed from the tyranny of the physical network provider.  

This is an interesting and counter-intuitive approach I many ways. It brings TV to the Internet rather than bringing the Internet to TV. As reported in a New York Times blog, Diller put his money where his passion is by leading a $20.5 million round of financing for Aereo and sits on its board. The money is going into a unique network design. The NYT article says that in the launch area in Brooklyn, “The company has arrayed thousands of tiny antennas — each the size of a thumbprint — so that each subscriber has an assigned antenna. That way, the company says, it complies with laws involving the exhibition of copyrighted material.” 

Chet Kanojia, the founder and chief executive of Aereo, had a lot to say about the startup including expressing feelings that it would help local broadcasters keep viewership which is leaking to cable alternatives. He and Diller have a point. Viewing is about time, the one thing we cannot create more of. If I do not have to pay the cable operators for all of the channels I do not watch, and can inexpensively pay for the ones I prefer to watch, especially since they are affiliates of the national networks, and can augment this with on-demand video from other sources, the cable industry is going to have to give some thought to this as a threat. If they think negotiations with content providers were difficult before, wait until next time. 

The exciting thing here is that you should not underestimate Barry Diller. He has transformed television viewing habits before. And while he can be a bit bombastic, he is responsible for two of my favorite sayings which I hope I paraphrase correctly:

1.       Many years ago, prior to the Internet, he said, “If you think traditional service providers will dominate the future of communications you are wrong. That is like saying railroads and barge companies were going to dominate the airline industry because they were transportation companies.”

2.       I also heard him say at a conference several years ago, again before the mass adoption of the Internet, that, “If people really wanted video on demand, Blockbuster would deliver!”

OK! On the second one he got it wrong, but it still was a great sound bite at the time. The point is Diller has a passion for upending the apple cart, and Aereo certainly has that potential. If he can line the pockets of local TV stations and not disturb the revenues of content developers he has got a shot.