Sorry, networks, but Aereo — the streaming TV service you love to hate — has no plans to go away. In fact, CEO Chet Kanojia and company are planning a major expansion thanks to $38 million in new spending money.
That's not just to fund the service's move from New York into 22 other major cities, as announced Tuesday, but onto videogame consoles, Smart TVs and the Android operating system. (Currently, Aereo is available via web browsers, set-top boxes like the Roku and Apple devices.)
Aereo has one very important backer in its corner, media mogul Barry Diller, who IAC/InterActiveCorp has invested millions in the startup. However, not everyone is enamored of the technology.
TV networks feel that Aereo, which uses clusters of tiny antennas to stream mostly broadcast channels directly to devices like tablets and smartphones, is stealing their content.
The court is not so sure. A federal court in July denied a plea by broadcasters for an injunction to block the service in New York. Kanojia said that decision emboldened Aereo to move into markets like Chicago and Houston.
TheWrap spoke with Kanojia at the Consumer Electronics Show in Las Vegas about Aereo's planned expansion, Hollywood apathy and his least favorite commercials.
What convinced you now was the time to expand?
Consumer engagement data and the volume of requests we were getting from different cities — when are you coming to Atlanta? When are you coming to Detroit? It was a consistent theme.
The data that we saw from New York in terms of engagement, the utilization of our product and the quality we were able to provide made us want to scale things. We don't have all the data or all the answers — but enough to give us confidence that we have a great product here that people really really like.
You mentioned "trends" in New York. How many users do you have now?
We don’t disclose that, but it's an incredibly positive trend.
How did you select the cities?
Obviously, this is phase one. We wanted to concentrate on the Eastern corridor. The location of the company is east coast, and it's still a small company relatively speaking.
Also, age and demographics. There's a huge Latin population in some of these markets, and 90 percent of viewership of Latin content is on broadcast.
You raise the Latin market, but there's no Los Angeles included here.
No Los Angeles, no Seattle — pretty much nothing west of Denver with the exception of Salt Lake City. The focus is eastern, and in stage two we'll focus on the west.
What does Aereo have to do in order to expand? What kinds of costs are associated with it?
We go in and establish the facility, which is really a data center that we lease from data-center providers. We put in rooftop antenna systems. We can get that done in about 60 days at any given system, and we have teams working at all the main sites. Our operation and execution is centralized. We're not building out people and offices in every location.
How much concern remains about legal roadblocks?
We firmly believe in our position. Nothing that we've seen or heard gives us any less confidence in the basic premise that consumers have the ability to do this today. We have the right to be able to do this. There is nothing prohibiting technology from being implemented in the ways we have.
We've made an incredible amount of effort to comply with the law.
Building the technology to comply with the law the way we did. We're clearly within precedent. We're more conservative than precedent.
The Dish CEO spoke at CES on Monday and struck something of a populist tone. Television is the medium of the masses but one owned by a select few. Do you sense a wave of democratization?
It really comes down to lack of competition and innovation. They haven't kept the consumer in the forefront because they don’t have competition; distribution is locked up. They have guaranteed payments, and it's getting worse with the increasing costs of cable.
There's been no innovation in advertising — the same, more irrelevant stuff you don't care about.
Do you have a truck?
Do you intend to buy one?
Well, how many times have you seen that same damn commercial? We're wasting consumer engagement with this. There's so little innovation in how content is distributed, user experience and all of that. Apathy is the biggest enemy.
You can't only feel this way about broadcast. Do you intend to add more channels to the service?
The sequence of events is as follows – markets, devices and make barriers go away. We need to get to a certain amount of the population base and given the general trends out of New York that's a doable exercise. Once we get to that point, we'll think about adding additional content.
What devices are you missing right now?
We don't have an Android app, and that's a big priority for us. Game consoles make a lot of sense. Smart TVs.
What isn't being discussed about Aereo?
There's so much attention and drama with the litigation that people are ignoring the importance of what's going on. For the first time, someone is coming out with a way consumers can get quality access to TV at an incredible price on any device. The change we're causing with cloud-based implementation is something that's a much bigger story at the end of the day than litigation drama.
In two years the company has gone from not being in existence to building out to 22 markets.