Dish Auto-Hop Gets Legal. Why TV Networks Must Change Or Lose Out..

FOX & Co may be taking Dish to court, but they might be better off moving with the times..
By and large, the entertainment industry never reacts favourably to any potential threat to their profit model. The aggressive pursuit of those that have downloaded or uploaded copyrighted content, the sponsorship of bills such as SOPA in the US and the Digital Economy act in the UK are just some of the strategies adopted in order to fight online piracy.

However the latest target for a raft of lawsuits from the television industry, isn’t a website operating out of some British student’s bedroom, nor is it a organised gang of DVD-burning criminals, but Dish Network, one of the largest satellite TV providers, who this week unveiled a little box that can edit out adverts and if the networks are to be believed, “destroy the television ecosystem”. Sounds a bit like Avatar doesn’t it? No? Maybe you’re right. But should Dish be struck down for trying to bring about a televisual apocalypse or should these giant TV networks move with the times and realise that if they want to continue to make millions from ad revenue, they’re going to have to start earning it again?

What are Dish up to?

Dish Network has attracted the wrath of several major networks, Fox, CBS, and NBC, over their new set-top box boasting the “auto hopâ€? feature, which skips advertisements on television shows (these three networks have launched lawsuits against Dish and Dish in turn have counter-sued them – and ABC just to be sure – in a bid to get pre-emptive legal clearance for their tool). Of course, this isn’t possible to do live, and the service is only used to catch-up on television that aired the day before (specifically, you can start watching ad-free television shows, at 1am the day after the television show aired).

Not that this is anything new. In 1999, ReplayTV attempted the exact same thing, however, lawsuits from Television networks as a response to this feature were filed, crippled the company and it went bankrupt shortly after. Crucially, they backed down before the lawsuits were able to conclude, leaving no legal precedent.

Thirteen years later, Dish is having a go, but the difference is that it has the financial means to take on the Networks. The company is Dish the third biggest pay-TV distributor with more than 14 million subscribers, so it has a fair bit of corporate muscle. The arguments on both sides are simple. The networks make money from advertisements. If less people watch adverts (for example, by using a DVR that can skip them automatically), there will be less incentive for people to buy advertising slots and thus less money available to make the television shows. Or, as Leslie Moonves, CEO of CBS put it; “How am I going to produce CSI for $4 Million without Ads?â€?

So How Will Dish Make This Stick?

Dish’s argument is that they should be allowed to offer their consumers a choice and a range of features in order to compete in the market. The technology is there, it has been for sometime, so why shouldn’t it be utilised? The fast-forward function has been part of DVR functionality since their entry into the market – Autohop just automates the process.

Consumers tend to agree – very few people enjoy watching adverts, but it goes a little bit deeper then that. A television show for a one hour time slot tends to come in at around the 45 minute mark. A programme for a half hour timeslot is about 21 minutes. Consumers aren’t so much fed up of adverts, they are fed up with the sheer volume of them.

So enter the suits. The claim being made by the networks is that by providing the option to remove the ads, Dish is infringing on copyright by modifying the programming. Dish argue that it is only automating a process that people with a fast-forward function will do anyway. It’s expected that this will be a drawn-out and expensive affair. If the networks win, things are likely to stay the same. If Dish wins, it does seem plausible that advertising revenue will be hit. By how much is anyone’s guess, ultimately it depends on how large the section of the audience is that prefers not to watch live TV and then out of those, how many utilise the auto hop, or a similar function (of which there might be many if Dish DOES win).

So what does it all mean?

However, it seems unlikely that auto hop, and doubtless other similar technologies will bring the TV industry to it’s knees. The TV and film industry has been late to adopt technologies and often this has cost them money. With Hulu in the US, 4od and iPlayer in the UK, not to mention Netflix and Lovefilm, there is a growing trend of consumers eschewing live television in favour of On-Demand services. Box-sets are part and parcel of serial television, people are willing to pay full whack for the complete collection.

The networks may have to change their distribution model and perhaps their revenue streams accordingly. Of course this is bound to cost them money. Times change, technology changes and people’s tastes change. Some say that business must keep abreast of these things and adapt accordingly. A subscription based streaming service, similar to Netflix, or a model with built in advertisements ala 4od could be viable alternatives. One could make the argument that an online service may allow more effective advertising – by tailoring the adverts shown to the user based on various marketing data, demographics and so on, a more focused ad-program could be implemented, in contrast to the current television model of bombarding the viewer with a series of adverts, of which many, as far as the individual is concerned, are of no interest.

The television industry must ask itself this question: Will the loss of advertising on non live television be more detrimental than ignoring trends and technology? Time will tell. If only we could skip that bit.

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