Meet the Start-Up That’s Scaring the Network Giants

Allison Kade
Posted

Aereo doesn’t disclose how many people subscribe to its service, but in the short time that Nicoletti has been a member, the service has certainly won him over. “Aereo is one of the most transparent, pro-consumer web services I’ve ever seen,” he says. “Unlike cable, they don’t sneak in fees, and they offer tons of options—multiple devices, platforms, mobile—to access your service.”

His one complaint? “I can’t stand that it doesn’t allow for uninterrupted viewing,” he says. “After a program is over, it goes to the main menu, and you have to select the next show on the same channel.”

Aereo also helps consumers based in areas without good broadcast signals. “My parents live in the Bronx, and until a few years ago, they were given free cable because you simply couldn’t pick up a signal in that neighborhood,” says Chris McKay, Aereo’s head of customer care. “Then about two years ago, everything went digital and cable fees were no longer subsidized. Their only option would’ve been to pay for a full cable package, which can easily cost $100 a month. Aereo fills that need for them.”

In the end, McKay says, “Aereo is the same as having an HD antenna, TiVo and Slingbox all-in-one. But it’s expensive to buy all of those, and you have to be tech-savvy to get them all to work. With Aereo, you just go to a website and start watching TV.”

A Look at Aereo’s Legal Battles

Last year, Aereo was sued by CBS, Fox, ABC and NBC, which argued that Aereo is violating copyrights by distributing their shows without paying for it. Aereo won the first lawsuit—a decision that was reaffirmed in a U.S. appeals court.

CBS has promised to sue again, so the startup has gone on the offensive by filing a complaint against CBS. “The fact that CBS did not prevail in their efforts to enjoin Aereo in their existing federal lawsuit does not entitle them to a do-over in another jurisdiction,” said Aereo spokeswoman Virginia Lam.

The goal is to allow members to decide what they want to watch—we think making content à la carte is important.

Despite Aereo’s legal wins, major networks could simply choose not to broadcast for free anymore. This may only be a threat, but News Corp.’s president and chief operating officer Chase Carey said in April that Fox could turn into a paid cable channel if the courts didn’t rule his way.

The resistance from major networks may seem counterintuitive: They’re already broadcasting for free, so who cares if a service lets users view that broadcast on their computers? The real issue is that Aereo is tempting for cord-cutters—and the networks can’t afford for millions of Americans to drop cable subscriptions because the networks receive a lot of money from cable companies that pay for their content.

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For its part, Aereo wants to add paid channels—and give subscribers the option to only pay for what they actually view. “The goal is to allow our members to decide what they want to watch, and what they want to pay for,” says McKay. “So if we end up offering additional channels in the future, those will be add-ons to the base, not a bundle deal. We think making content à la carte is very important, rather than forcing channels on people.”

Is Aereo Right for You?

The service appeals to a certain type of TV watcher. “If you want HBO and ESPN, then Aereo will not provide that for you,” McKay says. “But if you don’t watch that much TV, and don’t want to pay a huge bill for the amount that you do watch, this is something you might want to consider.”

  • SamFarrah

    I love it! Between Aereo and Netflix I can watch everything I want.

  • arie

    I use an old school antenna; I don’t get many channels, but I watch too much as it is! With Aereo (et al) I’d need internet — which I do not have/pay for at home. Let’s work on enabling customers to get a reasonable rate on internet-only.

  • Lucy P.

    I found that even when I had over 900 channels, I still couldn’t find
    anything to watch. Aereo, Hulu and Netflix work for me and are a lot
    cheaper with less ads.