Is Aereo a Winner?

Does the Aereo service and pricing model make sense? To be honest - I don't think so.

Here's why.


In a nutshell Aereo offers customers their own TV antenna to pick up free off-air channels. Aereo then allows subscribers the ability to access these antennas via the web so the subscriber can watch TV live without a cable company and without paying any retransmission fees. In addition Aereo will also provide a cloud based DVR so that subscribers can recorded content on their own schedule.

Sounds great - right? But here's the thing - as I understand it the service would be available to New York City subscribers with iPhone, iPad, MAC's running Apple Safari or Roku devices. What are these devices connected to? Wireless data plans? Broadband? So on top of the $8 per month or $12 per month for Aereo  - the subscriber would also have some sort of broadband bill and on top of that they probably have an $8 per month or more Netflix or iTunes expense. It will be more costly than people think.

Who is the service geared to? The person who wants to take his TV everywhere he goes? OK - I can see that. But if that's the case why is the service so price sensitive at the moment? And couldn't that person just catch up on shows via iTunes or if he has the bandwidth for Aereo - wouldn't he also have the bandwidth to access his home DVR? Cynically I'd guess that the target market would be people in the city who want to get away with watching TV at work.

The real target market seems to be the cord-cutters but as I said above - they still would have to pay for some sort of broadband connection (and maybe other expenses).  Do you really want to base a business whose target market are people who seem determined to eliminate all the bills in their lives? My hat's off to the cord-cutter - I admire them. I couldn't do it because I like live sports too much. Just saying I wouldn't invest in a business who picks them as their core market.

What about the $1 per subscribers who just sign up for the day? Those dollars could really add up. Sure - I could see this working for people at the airport but I also think just two people in a Starbucks on a Sunday watching football will probably crush the WiFi. And it's not like Aereo doesn't have overhead and operating costs. It would take a lot of dollar bills to pay those costs every month.

And if the service does become successful - what's to stop Verizon, ATT or even Apple from copying it? Those companies could just add the service into the broadband bill and then the cord-cutters would simply eliminate their bill from Aereo.

I hope Aereo is successful - but I just don't see it happening.