Aereo Sets 22-City Expansion
Aereo Inc. has raised a $38 million second round that will help extend its broadband TV/cloud DVR combo into 22 more markets this year, theoretically reaching 97 million Americans.
Aereo has raised $63 million so far. The second round was led by IAC/InterActiveCorp and Highland Capital Partners.
Today Aereo only offers service in New York City, but the expansion will get under way this spring, Aereo CEO and founder Chet Kanojia said Tuesday during a Citibank conference in Las Vegas held alongside the Consumer Electronics Show.
Here are the cities Aereo is targeting for its first expansion phase: Minneapolis; Madison, Wis.; Cleveland; Providence, R.I.; Boston; Philadelphia and Pittsburgh, Pa.; Chicago; Salt Lake City; Denver; Kansas City; Baltimore; Washington, D.C.; Raleigh-Durham, N.C.; Atlanta; Austin, Houston and Dallas, Texas; Tampa and Miami, Fla.; Birmingham, Ala.; and Detroit.
Aereo's platform uses tiny antennas to capture free, over-the-air broadcast TV signals, transcodes them, and delivers them to customers over broadband. That's coupled with a network DVR. It also has a deal to stream Bloomberg TV, and is in discussions to carry more cable TV channels.
The expansion is predicated on how Aereo fares in its lawsuits, as major broadcasters are suing over copyright claims and want the service shut down. The broadcasters are worried Aereo's model will harm their ability to strike rich retransmission deals with pay-TV operators. (See Judge Keeps Aereo on the Air and Aereo Fights for Its Life.)
Aereo's Kanojia wouldn't forecast an outcome in the case.
Kanojia shed some light on what Aereo has learned about its customers so far. He says it’s a "50/50 mix," with half being "cord-cutters" and "cord-nevers," and the other half consumers pay-TV subscribers. Aereo has not disclosed a subscriber number, but he said about half of Aereo's customers use the product three to four times a week, with the reminder using it about two times per week. About 80 percent of usage happens indoors using Wi-Fi, he added.
Aereo will launch its first marketing campaign this quarter.
Kanojia also discussed Aereo's architecture in some detail, noting that it doesn't use a content delivery network and that it requires only 200 square feet of surface area to serve 350,000 subscribers. The larger scaling challenge, he said, is powering and cooling those sites.
The service is local, so Aereo doesn't have to worry about long-haul connections and can instead just simply lease fiber in its markets. Aereo's picture quality stands out, he said, because "we control the quality of that entire circuit."
— Jeff Baumgartner, Site Editor, Light Reading Cable