CBS says it will consider streaming live TV over the Internet to compete with an upstart rival — if that rival survives a looming battle in the Supreme Court. While that's potentially a boon for consumers, the announcement also highlights some of the perverse incentives in the industry.
To watch broadcast TV today, most people need a digital antenna that can catch signals coming over the air. Recently, though, a company called Aereo developed an antenna that can convert those signals into an Internet stream. Customers who sign up and pay for that service can then get network TV on their computers.
Broadcasters don't like the idea because it lowers the incentive for people to watch network TV using more traditional means, such as cable, and cable providers pay broadcasters for the right to carry network content. The broadcast industry has gone so far as to sue Aereo in various states, alleging that by not paying licensing fees, the start-up is guilty of copyright infringement. Aereo argues that it's simply taking what's freely available to anyone else with a TV antenna and providing a service on top of that.
Whether Aereo's activity is legal is now a question for the Supreme Court. And on Tuesday, CBS chief executive Les Moonves said that if Aereo prevails, CBS could start streaming its broadcasts, too. According to a CNET report:
"If there are systems out there that try to hurt us, then we could go to OTT," he said, using the abbreviation for over-the-top Internet television delivery. "If Aereo should work, if they should win, which we don't think is going to happen, we could go OTT with CBS."
If that happens, Aereo will become one more example of a competitor disrupting a legacy industry. But consider the opposite: Implicit in Moonves's announcement is the idea that if Aereo fails in the Supreme Court, CBS will see no reason to launch an over-the-top offering of its own. Things could stay just the way they are, as if Aereo never existed.
That's despite the fact that at least some Americans appear to want an Aereo-like service. The company won't disclose how many subscribers it has, only saying that it's "sold out" in New York. But considering how zealously broadcasters have gone after Aereo in multiple states, many of them view Aereo as a threat.
CBS is offering to adapt in response to that threat. What it isn't saying is whether it would make those same changes if it didn't have Aereo to worry about.