The Internet is changing the way people watch TV. But will Aereo's streaming TV service be enough for consumers to cut cable?
Could a new streaming TV service convince millions of Americans to pull the plug on cable?
Only time will tell, but a new startup called Aereo is stepping up to the competition by allowing subscribers to stream local broadcast networks and Bloomberg TV from dime-sized antennas it keeps on Brooklyn rooftops.
According to CEO Chet Kanojia, his company's new system has the potential to disrupt the industry forever.
Aereo allows customers to bypass cable companies and stream broadcast television onto tablets, smartphones or even a television — with a Roku device connected — for as little as $80 a year. Subscribers are assigned their own antenna that pulls broadcast signals from the air which uses Aereo's software to stream it to the customer.
But as Aereo expands beyond its current markets — New York, New Jersey and Connecticut — into 22 new ones this spring, it is facing legal challenges from companies that say its service violates copyright law.
At stake are billions of dollars in fees for cable companies and billions in ad revenue for networks. A federal appeals court ruled Monday in favor of Aereo, allowing the service to continue operating as the case moves to trial. Aereo is being sued by networks including FOX, NBC, CBS and ABC.
About half of Aereo's subscribers are cable subscribers who use the service on mobile devices or on second or third home television sets, Kanojia told Time magazine in an interview last month.
Kanojia says that the high-speed broadband-based delivery of television could threaten the way traditional cable companies operate, where viewers only watch a handful of channels out of the hundreds available. "I don't have enough mental bandwidth to think about 50 shows. I have five shows. And I don't think I'm alone," he says.
While Aereo only offers a handful of channels, Kanojia says other content sources like Netflix round out options for viewers. "The gap we can't fill is ESPN, obviously, but even pay channel stuff is showing up on iTunes eventually," he told TIME.
Combined with Netflix and other services, Kanojia says, viewers can find the shows they want without having to shell out more than $100 a month for cable. That, the company bets, will be appealing to consumers.
The cable box is not dead yet, but its future is a little less certain.
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