Compared to the music and news industries, the television business has so far managed to avoid being upended by the disruptive forces of the Internet. That's about to change.

Despite the industry's furious efforts to starve or shut down its online rivals, the Internet is starting to carve out a respectable slice of TV's future. The good news is that while the coming transistion is likely to be rough on many established networks and providers, it's going to be great for consumers and developers. Here's how.

Netflix Bounces Back, Surpasses HBO 

Case in point: Netflix. The video subscription service has bounced back from its 2011 faux pas to not only regain members, but surpass HBO in U.S. subscribers for the first time ever. As Quartz's Zach Seward points out, Netflix now commands more daily attention than any cable channel in the United States. 

See Also: Do We Really Need Amazon TV? No, But Amazon Does

Netflix's dominance over HBO in particular makes for some pretty symbolic future-of-TV discussion fodder. It is, after all, HBO that refuses to offer its programming as a stand alone subscription service, despite growing demand for such a option. It is precisely its old media business relationships and norms that are holding HBO back from letting non-cable subscribers use its HBO Go app, a fact that seems worth recalling at this particular moment in history. It's no wonder that the company's CEO is publicly rethinking that strategy and admitting to reporters that cable-free access to HBO Go may be an inevitability.

It's also interesting to note, as Seward does, that HBO started out much like Netflix did, by first making out-of-theater movies available to subscribers, and then moving into original programming. 

The Internet Masters What Matters: Programming

For the last few years, it was the hardware, distribution and overall experience of watching TV that started to change at the hands of the Internet and mobile tech. Now, crucially, we're getting down to what matters most: the stuff that actually draws viewers. 

The trend toward original, Internet-only, TV-style programming is something we tech blogs have watched and opined about for the better part of a year. In the first half of 2013, the theoretical promise of original Internet TV has morphed into a confirmation that it is, in fact, something normal, non-techie people care about.

Netflix's Lilyhammer may not have changed the landscape, but it was an important precursor to House of Cards, which appears to be doing exactly that. Meanwhile, Hulu, Amazon and YouTube continue to make their own investments in original programming to compete with cable and network TV. 

The success of House of Cards has led to a great deal of discussion about the rise of data-driven TV programming and what it means for TV's future. Unlike the people who have traditionally made TV programming decisions, Netflix is sitting on a mountain of data about its users. That includes 30 million plays and 4 million ratings per day, in addition to details about when people watch, from which devices, which parts they rewind and more.

By looking at this trove of data, Netflix was able to place a pretty safe bet on the notion that a remake of this particular BBC show starring Kevin Spacey and directed by David Fincher would do well. 

Netflix isn't the only company tapping its users to help with video programming decisions. This weekend, Amazon asked viewers to rate the pilot episodes of 14 different Web series, which apparently resulted in quite a few views for the original programs. The company hasn't launched a stand-alone Netflix competitor, but Amazon Prime appears poised to evolve into such an offering. There's even an Amazon TV set top box rumor, hot off of the presses.

Aereo: Please Excuse This Interruption

Next month, people living in and around Boston will be able to join New York's early adopters in subscribing to Aereo, an innovative and controversial Internet TV service. Since its launch, Aereo has under assault by much of the TV industry, which claims its antenna-renting and re-broadcasting model of mobile and Web TV amounts to copyright infringement. That may or may not be true, but it's certainly threatening their business model, which is why they wasted no time in trying to sue Aereo out of existence. 

So far, Aereo has prevailed. That is, early court rulings have sided with the startup's claims of fair use and thus declined to shut it down before the lawsuit goes to trial, which will undoubtedly be an interesting affair to follow. 

If Aereo survives this litigious onslaught, it's poised to be one of the most disruptive forces the industry has seen in awhile. And while that would be bad news for network executives, it's actually pretty great for consumers, who will be able to tune into broadcast TV online without dealing with rabbit ears or a cable provider. It would also be a huge win for the Internet in the battle for TV's future.

The Original Web Programming Revolution Continues

The next big test for Internet-only TV will be the return of cult classic Arrested Development, a new season of which will land on Netflix next month, eight years after Fox dropped the original. If the show's enduring popularity and House of Cards' recent success are any indication, May will be a good month for Netflix. 

We won't actually know how well Arrested Development does, though. That's because like House of Cards and everything else on Netflix, it isn't tracked by the same TV ratings system that has measured TV viewership in the U.S. for six decades. The only numbers we get from Netflix are the ones it chooses to share. The company isn't typically generous with that data, which is somewhat ironic considering how much its users willingly hand over.

That all might be about to change, as Nielsen gets ready to update its TV audience measuring methodology to include Internet sources. It's not clear whether the long-overdue update will track views on Netflix when it gets rolled out this fall, but the normalization of TV measurement should help paint a clearer picture of what's getting watched, regardless of the distribution channel. 

If nothing else, the Nielsen update further illustrates the extent to which TV is changing in the age of streaming services and mobile devices. 

The first time you launch Aereo, you start to see why TV network executives are losing their minds. It's not because the service feels like it's doing anything wrong. Quite the opposite. For the consumer, it's doing almost everything right.

When you log in, you're shown a TV Guide-style listing of shows that are currently airing. It's not just the four or five obvious options, either. In the New York market, there are 30 broadcast channels that Aereo grabs and rebroadcasts to your account via the tiny antenna you're effectively renting from the company when you sign up.

See Also: To Truly Stop Aereo, Broadcasters Need To Innovate Like Hell

It's mostly typical broadcast fare: local news, daytime soap operas, people having meltdowns on Maury, prime time sitcoms, PBS and so forth. All the standard broadcast networks are augmented with local channels, foreign language networks and an inordinate amount of religious programming. The selection may not be as robust as that of cable, but some of the most popular shows on TV are waiting there, ready to be watched or DVR'ed to the cloud for later.

TV On Any Device, Second Screen And All

Aereo doesn't have native mobile apps yet, but it makes up for that with a very capable, cross-platform Web app. It works in the browser on my iPad and iPhone, from which it can be AirPlayed directly to my television via Apple TV. I didn't get the chance to test it, but I'm presuming Aereo works on most other modern browsers and platforms.

Thanks to iOS multitasking, I can close the browser and do other things like check email, browse the Web and tweet. You know, the second screen stuff we all do anyway. It all still works, even if we use our second screens to feed content to the first screen. The only drawback is that the transition from video to video is not entirely smooth with AirPlay. That experience should get better once Aereo develops native mobile apps and, eventually, lands on smart TV platforms. 

I am admittedly not a huge TV person. Still, as I use Aereo's Web app from device to device, its value starts to feel more and more obvious. I can watch my favorite PBS shows, tune into the local news (for whatever reason) and watch popular prime time shows like 30 Rock and Parks and Recreation, all using the Internet, which is what I use for just about all other media consumption. 

Indeed, after a few days of testing Aereo, I'm left with the distinct impression that this is not only a useful service, but something that needs to exist. I understand why it frightens the TV execs, but I wholeheartedly disagree with them. This is a hugely innovative service that hands control back to the TV-viewing consumer in a way that wasn't possible before. I'm not a legal scholar, but the copyright infringement claims made by the big media conglomerates against Aereo seem like a stretch. So far, the courts have agreed. 

The TV Antenna Of The Future

Since Aereo launched, the television industry has been hoping to sue it out of existence. Early attempts to have the service shut down have been unsuccessful, thanks to legal logic that may well wind up saving Aereo in the end. Meanwhile, the networks are clamoring for a plan B, which, if you believe the claims of network execs, includes threats to pull out of broadcast TV all together. (Said threats are, of course, unbelievably stupid.)

Aereo does not disrupt the core broadcast business model. When I'm watching TV shows on my iPad using Aereo, I'm still seeing all the commercials, just like I would if I tuned in via an antenna on my television set. The problem is, my antenna sucks. On a good day, I can get four or five channels to display clearly on my TV, and even that involves some finagling. It feels decidedly old-fashioned to be tinkering with an antenna just to watch NBC. 

By contrast, Aereo feels right at home in the 21st century. When you watch it, it doesn't feel like you're stealing anything. Instead, it feels like the service has restored your ability to conveniently tune into broadcast TV — an ability that's atrophied for years thanks to changing viewer habits and, consequently, expectations for picture and sound quality.

Broadcasters and TV service providers didn't come up with a good solution, so Aereo rose to the challenge. Aereo isn't stealing anything. It just wants to sell you the TV antenna of the future.

Why Broadcasters Hate Aereo

This infuriates broadcasters because it could eventually threaten the lucrative fees they get from cable providers, whose all-or-nothing, bloated content bundles suddenly look a little less attractive once a service like Aereo is available for $13 per month. Combined with Netflix and Hulu, Aereo makes cable look less necessary than ever and all three combined are still cheaper than most cable bills. 

I have no interest in subscribing to cable. It's expensive and the vast majority of what I'd be paying for is, so far as I can tell, complete garbage. Instead, I catch up with favorite shows via the Internet, where I can also find a growing selection of perfectly worthwhile non-TV video. Aereo is perfect for people like me.

More importantly, it could be an easy sell to many in the upcoming generation of "cord never getters" who are now totally accustomed to getting their TV online. We like to think about what the future of TV might look like. If it survives, Aereo seems very well positioned to be a part of that picture.

An ongoing court battle may decide the fate of an upstart programming provider that could prove to be disruptive to broadcasters and even other services that provide ways for cable cutters to obtain the shows they want.

Aereo, the controversial startup that provides subscribers with access to local TV programming on tablets and smartphones, will live to fight another day after a decision handed down from the U.S. Court of Appeals for the Second Circuit in New York, affirming an earlier ruling blocking an injunction on the service.

The preliminary injunction was requested by the plaintiffs in the copyright infringement lawsuit brought against Aereo by local New York broadcasters and their corporate parents.

Aereo uses tiny antennas to rebroadcast over-the-air channels to each of its subscribers' mobile devices, even recording broadcasts using DVR-like functionality.

The problem for broadcasters, which include CBS Corporation, Comcast, News Corporation, PBS and the Walt Disney Company, is that none of Aereo's $8/month fee goes to the local TV stations. This is not the case when programming is carried over cable and satellite services, which have to pay the stations rebroadcast fees - fees the TV stations are increasingly depending on in a time when advertising revenue is on the decline thanks to competition from Internet ad services.

(See also To Truly Stop Aereo, TV Broadcasters Need To Innovate Like Hell.)

The initial injunction against Aereo was spiked in July 2012, and the broadcasters in the lawsuit vowed to appeal. Yesterday's ruling from the Second Circuit is the result of that appeal.

Because each customer controls one and only one antenna in Aereo's antenna farm, the judges felt that this did not constitute public performance of TV programming. And the DVR service seemed to be in line with an earlier ruling in a case against Cablevision that found DVRs to be perfectly fine.

For cable cutters, particularly those in the larger cities when antenna use is not always practical, services like Aereo will serve as an effective tool for customers seeking to bypass cable and satellite fees.

But Aereo could also be a source of disruption for the first generation of alternative broadcast sources, such as Hulu, Apple's iTunes, and Amazon.

For example, today, if I don't catch a network show over the air (which happens a lot on my schedule), and it's not available on Hulu Plus, I will have to buy that episode from Amazon. But if an Aereo-like service ever comes to my city, I can DVR that episode and hold it to watch it when I want… even without waiting the usual one day later for the episode to be available on one of these services.

If reliable, then now I would have to re-balance my entire cable cutting budget. Hulu Plus provides my primary network TV programming with Amazon as backup. An Aereo-like service would enable me to skip the Hulu Plus subscription fee and buy less programming from Amazon, thus saving me even more money, which is the whole point of this exercise.

That's just in my situation, of course, but I would imagine anyone that's taken an Apple-centric approach would find similar savings with buying less programming from iTunes.

Aereo and similar services won't completely replace Amazon/iTunes content, because there's content on basic cable channels I like to watch, and more esoteric channels like BBC America for Doctor Who. Not to mention that right now Aereo works best for tablets and other mobile devices, not the big-screen television.

Aereo itself is not done yet - the plaintiff broadcasters can still appeal the injunction decision up the legal ladder. Even if they don't, there's still the actual court case that must be to be held. But for now, it looks like the startup has found a way to successfully dodge copyright restrictions to keep its service going.

If ultimately successful, Aereo and similar services will prove to be disruptive to many forms of programming providers, not just broadcasters. Expect a lot of companies to be tuning in to this trial.

Image courtesy of Aereo.

Television broadcasters are freaking out. Certain that the courts would see things their way, companies like CBS, Comcast and News Corp. instead found that the Second Circuit Court of Appeals ruled in favor of Aereo, an Internet TV service they've been trying to shut down for a year. 

With Aereo's second legal victory under its belt, it might be time for broadcasters to focus on Plan B: to start, y'know, innovating like crazy. 

So Aereo Is A Go. For Now

At issue is whether or not Aereo violates the broadcasters' copyrights by retransmitting local, over-the-air channels so its subscribers can access them from smartphones, tablets and an array of smart TVs and streaming set top boxes. When Aereo launched in New York last March, the broadcasters immediately asked a judge to shut it down via preliminary injunction, arguing that indeed, it violates copyright law by generating a legally forbidden "public performance" without paying compensation. 

In its defense, Aereo has argued that the way it's retransmitting broadcasts — using tiny, remote antennae rented by its customers — does not constitute a public performance, since its use by individual viewers was inherently private. Aereo won a first round in court last July. Today, in a 2-1 decision, the Second Circuit Court of Appeals upheld the earlier ruling. 

The networks will undoubtedly continue pushing their case, opening the prospect of a full trial and eventually, a possible Supreme Court ruling. Broadcasters, of course, have every right to pursue a legal case against Aereo. This is yet another example of how technology has evolved faster than the law can keep up and how we, as a society, need to figure this stuff out.

In the meantime, broadcasters should prepare themselves for the possibility that Aereo will win in court, allowing its expansion to continue.  

Why Aereo Exists

Aereo is a pretty attractive service, especially for the cord cutter set. And for those who haven't yet considered canceling their cable subscription, products like this make it more tempting. It remains to be seen how much overall demand there is for Aereo, but the fact that it exists at all is pretty telling.

The legal niceties aside (those will be decided by courts, not blogs), Aereo is doing something innovative that empowers media consumers in a way that wasn't previously possible. That's because nobody — least of all broadcasters — made it possible. Now somebody is.  

When the Internet rose to prominence, newspapers didn't have the luxury of suing its brains out. They had to deal with the ways in which their landscape was shifting, which was ultimately better for consumers. Similarly, broadcasts may not turn out to have that luxury with Aereo. Trying to sue them out of existence is not an unexpected response, but it may not succeed. They need a backup plan. 

Should broadcasters have come up with this idea? It's nice to talk about how industries should disrupt themselves, but that's rarely how things actually work. It would have been totally counterintuitive for broadcasters to band together and develop the type of functionality that Aereo is offering. Smart, yes, but not necessarily a sound business decision within the framework in which these people generally think. 

What Should Broadcasters Do? 

It's a fruitless debate anyway. Broadcasters didn't come up with Aereo. Aereo did. Now the Comcast and News Corps. of the world need to think about what they'll do in the event that the disruptive little startup prevails in court. 

Aereo has already filed four patents that cover the precise technology its using, so it's probably not feasible to recreate its functionality. But what does Aereo do for viewers? It provides cheap, multi-channel, high-definition access to broadcast TV from an array of devices and allows for DVR recording. It lets you do all of this without paying for a cable subscription. 

To their credit, cable companies are already working on ways to bring live TV to tablet and smartphone owners. Comcast's TV Everywhere initiative clearly anticipated trends in the way people watch programs that could threaten their core business model, so they moved on it.

But while services like TV Everywhere and XFinity Streampix are nice, they're add-ons to a cable subscriptions, which some people simply don't want to deal with in the first place. It's unlikely that Comcast or Verizon is going to come up with a worthwhile Internet TV offering that doesn't hinge on their existing models — and the sky-high fees that support them. 

Broadcast networks might not be able to rent out tiny antennae, but they don't need to, either: They already have much of the infrastructure in place to provide live Internet TV signals and make them available from mobile devices and connected TVs. If they band together and offer enough programming, they could charge a small subscription fee. Think Hulu for live broadcast TV. In fact, yes, just tack this onto Hulu for a couple extra bucks. Bingo. 

There may be sound business reasons why broadcasters wouldn't consider doing this. Their relationships with cable providers may not allow it. But that rigid, no-we-mustn't mentality is exactly what created the void that allowed Aereo to crop up in the first place. It might be time to change that mindset.

Lead photo by schmilblick

Aereo, Barry Diller's uber-controversial Internet TV service currently available only in New York, is expanding. This spring, consumers in 22 more U.S. cities will get the ability to tune into broadcast TV channels via desktops, tablets and smartphones. And the TV networks are not happy. 

Aereo uses tiny, remote antennas to grab broadcast signals and convert them into video formats that can be transmitted over the Internet and watched from any device and recorded for later viewing. It's a brilliant idea, but one that immediately won the ire of the TV industry, who responded with a lawsuit. In July, a federal court ruled that Aereo did not violate copyright law in the way broadcasters alleged, allowing the service to continue operating as a larger legal battle looms. 

In its corporate rhetoric, Aereo very deliberately positions itself alongside the VHS tape and DVR, two technologies whose core functionality was challenged by the content industry on copyright grounds. The company and its supporters are hoping that the courts see the similarities as well. (For more insight, see Is Barry Diller Stealing Broadcasters' Content? Patent Application Says Maybe Not.)

Aereo's fate is far from firmed up, but that's not stopping the company from pushing forward with its expansion into new markets. Specifically, it will launch later 2013 in Boston, Miami, Austin, Atlanta, Chicago, Dallas, Houston, Washington, DC, Baltimore, Detroit, Denver, Minneapolis, Philadelphia, Pittsburgh, Tampa, Cleveland, Kansas City, Raleigh-Durham (NC), Salt Lake City, Birmingham (AL), Providence (RI), and Madison (WI).

For $8 per month - the price of a Hulu Plus subscription - users can tune into whichever over-the-air broadcast channels are available in their area. It's the same stuff you can get with a digital antenna affixed to your TV, but Aereo makes it available across devices and has built-in DVR recording functionality. 

Will people really want to drop $8 monthly to access broadcast TV more conveniently? Aereo is banking on it. Even combined with a Hulu Plus subscription, users would pay only $16 per month for access to a huge selection of content, some of which is live - including many live sporting events. That beats cable's hefty monthly bill, but it still won't get you Game of Thrones or the latest episode of Breaking Bad. 

If Aereo manages to survive its legal challenges (and the company just raised $38 million to fund its expansion and pay its legal bills), it's yet another step toward making the cord-cutting lifestyle a viable alternative. Of course the Cable/Satellite industry isn't sitting still: on Monday Time Warner Cable announced a limited deal to make some of TWC content available on Roku set-top boxes - although users will still have to have a cable subscription.

See Is Cable TV Tuning In Its Own Obsolescence?