If Aereo Wins, How Can Aereo Win?
Aereo, the Web TV service that gets its day in court today, says that if it loses its case, the Internet itself could be imperiled.
So let’s say Aereo ends up winning, and the cloud computing services everyone uses today are safe for the future.
What about Aereo’s future?
That will still be very much an open question. CEO Chet Kanojia will have won the right to sell Web access to broadcast TV programs, without paying for them himself. That doesn’t mean he’s going to have a successful business.
Kanojia is too smart to say otherwise. He says that if he wins his fight in the U.S. Supreme Court, Aereo will raise more money, and spend that money making its service available to more people, in more cities.
In the past, Kanojia argued that once he got legal clearance, he would be able to add more programming options to Aereo’s lineup, presumably from programmers who didn’t have any interest in upsetting the likes of CBS, 21st Century Fox and Disney, who are suing him.* And for a while, he floated the notion that he’d be able to add more programming even without legal clearance.
But aside from a deal to carry Bloomberg TV’s programming, Kanojia hasn’t added anything beyond the over-the-air stuff he is pulling down via his famously tiny antennas. Now he says that’s not a priority.
“For us it’s a focus question. We’ll stay put until we have a wide enough distribution base,” he says. “I don’t want to be in the business of buying wholesale content and retailing it to consumers. That doesn’t make sense in the long term.”
So that means people can use Aereo to watch “The Good Wife” on CBS and NFL games on Fox, but not “Mad Men” on AMC or “Monday Night Football” on ESPN.
Are those options, even paired with whatever you can get from the likes of Netflix and Amazon, enough to satisfy lots of people? People rail about paying for cable TV, but they also watch a lot of cable TV — and they watch a lot more programming on cable than they do on broadcast.
And while the TV guys’ threats to abandon their enormously valuable broadcast spectrum and move their shows entirely over to cable has little credibility, they certainly could move some of their shows off broadcast.
After all, they’ve been doing it for years — particularly when it comes to big time sports. If you wanted to watch Wisconsin/Kentucky and UConn/Florida in the semifinals of this year’s March Madness tournament, you couldn’t watch it on Aereo.
It will also be interesting to see how Aereo’s distribution push goes. Right now you can watch Aereo using a Web browser, on an app designed for Android devices, and there are plans for an app on Google’s Chromecast stick.
But Aereo doesn’t have dedicated shelf space on most of the big Web TV devices its potential users are likely to use, like Microsoft’s Xbox or Sony’s PlayStation. There is a dedicated Aereo app on the Roku box, but you have to know where to look for it — it’s in the equivalent of a brown paper bag, along with the porn.
Kanojia says those deals will get much easier to come by once he has legal cover. “The general sense I get, across the board, is `We really like it, we like what you’re doing, but we don’t want to [work with you] and then have to stop. So let’s just wait until we can go at it hard,'” Kanojia says.
Once that happens, Kanojia says, he’ll have a product that could eventually attract 5 percent of the TV-watching market. “That would be a very meaningful business for us.”
It’s impossible to figure out just how realistic that is, in part because Aereo refuses to hand out any numbers about its subscriber base so far. When will they? “When we file our S-1” — the papers that the company would file before it went public, an Aereo investor once told me.
In New York Times columnist David Carr’s very nice piece about what’s at stake today, Kanojia refers to Aereo as “the Sony Betamax of this century”.
His investors would hate it if that turns out to be true. Because with Betamax, Sony won a landmark decision allowing customers to record TV in their own homes — but lost the battle in the marketplace. If Aereo wins in court, it will still have a long way to go.
*NBCUniversal, which is also suing Aereo, is a minority investor in Re/code.