We can stream movies on Netflix. We can buy TV episodes on iTunes. So why, in 2013, can’t we watch live television on our smartphones, tablets and computers without a pricey cable subscription?
That’s the question driving a growing number of innovators who are upending the TV status quo—designated set, $100 provider bill, dozens of channels you don’t actually want—to offer a cheaper, more accessible live-viewing experience on mobile computers.
The most prominent player is Aereo, a start-up that in August began streaming live TV over the Internet in New York City for $8 per month. Its trick is a warehouse full of antennas, which digitize freely available signals from ABC, CBS, NBC and Fox and premium signals from partners like Bloomberg TV. Meanwhile, Intel is quietly brokering deals for a live-TV set-top box, which will launch later this year. And on May 9, Senator John McCain introduced legislation to promote à la carte cable-channel buying and protect services like Aereo.
Broadcast networks and their affiliates are especially wary of this change. Every year they make a reported $3 billion from cable providers, which pay fees to retransmit their programming—a crucial revenue stream now that plummeting ratings have made it tougher to court advertisers during upfront week (which ended May 16). But major networks make nothing from Aereo, which has prompted CBS to sue the start-up for copyright infringement and Fox to threaten to go cable-only. “The survival of the programming itself would require a new business model,” says Richard Stone, legal counsel for Fox.
And yet Aereo has endured those battles and plans to expand to Boston and Atlanta soon, opening the door for any number of copycats. Tellingly, CBS and Fox have started to fund Aereo alternatives that give them more control, such as Dyle and Syncbak. And ABC just announced live-streaming capabilities via its mobile app (for select cities).
At this point, those moves may be the smartest options. “You’ve seen it with music. You’ve seen it with books,” says Aereo CEO Chet Kanojia. “If your product doesn’t add enough value to command the price you want, people just leave and go elsewhere.” Indeed, according to Nielsen, the number of no-TV-set households hit 5 million this year, up 67% from 2007.