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Win or lose, Aereo's impact could change OTT market

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Aereo is looking less likely to win its case before the Supreme Court, but the outcome of the case will change the online video landscape, some industry players say.

Wells Fargo Securities analyst Marci Ryvicker recently gave Aereo just a 30 percent chance of prevailing.

David Wittenstein, a partner in Cooley LLP's Technology Transitions group, wasn't that precise in a chat with FierceOnlineVideo, but felt that the broadcasters have a slight edge over Aereo based on reports he heard on the strength of the arguments made by broadcasters in April.

Wittenstein believes Aereo will go out of business if the Supreme Court decision goes against it.

What happens if Aereo beats the odds and wins? In that case, broadcasters would still have some legal options, Wittenstein pointed out. For one, "they haven't had a trial on the merits of the case," he said. "Even if (broadcasters) get bad news this month, they may still win."

Broadcasters could also go to the FCC and try to convince the commission that Aereo needs to pay them retransmission consent fees, he added.

Popcornflix EVP David Fannon is also placing his bets on the broadcasters--although he feels Aereo may not be out of the game even if it loses the decision.

"I'm very confident that the broadcasters are going to win this," Fannon told FierceOnlineVideo. However, he feels Aereo still has an opportunity to pivot and stay in business despite a negative outcome.

"The interesting thing is I believe Aereo is somehow going to say, we've got this service, we're going to offer this service, but you're going to have to house your antenna … separate from (Aereo)," Fannon said, suggesting that Aereo could offer the antenna or DVR as separate items or services and in a way that is in line with the 2008 Cablevision decision, "…and then things will be OK."

"The people running Aereo are not dumb. This to me seems like a simple solution to this problem. But they didn't. They must have a reason why they didn't (choose this solution)," he added.

Either way, it's an interesting time for broadcasting. A win by the broadcasters would only buy them time to refine their own over-the-top video plays. A win by Aereo could upset the whole broadcast apple cart, an April article in Fortune surmised. "Should Aereo win the right to retransmit the OTA signals, other operators could use similar technologies to also avoid paying the retransmission fees, and that, say some legal experts, could undermine the entire broadcast business model," the article stated.

Fannon sees this as a problem for the OTT market. Popcornflix, an ad-supported online video service--currently with about 1,000 movies and TV series in its library--may be affected by an Aereo win in a roundabout way.

"The interesting thing about the case is, Aereo's getting paid (through its subscription model), the ISPs are getting paid. The broadcasters are the only ones not getting paid for that content," Fannon said.

"People are fine for now because most use cable to get their Internet," he said, adding that cable operators may increase what they charge for bandwidth if subscribers don't buy into triple-play bundles.

"And then Popcornflix is going to want to get to (a cable operator's) server. There's a fee. So now Comcast is getting their fee from me, and from the consumer for broadband."

Ultimately, Fannon feels, the consumer ends up paying for that perceived gap in revenues. No matter what the outcome at the Supreme Court, the biggest damage may be to consumers' wallets, in the form of higher subscription prices from both ISPs and online video providers.

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