December 30, 2014, 4:32 PM ET
In Its Last 6 Months Of Existence, Aereo Subscriptions Grew 40%
By Shalini Ramachandran
Wall Street Journal
http://blogs.wsj.com/cmo/2014/12/30/in-its-last-6-months-of-existence-aereo-subscriptions-grew-40/
Yes, Aereo Inc. was tiny. But it grew a lot faster than most people thought.
The now-defunct Web TV service, which recently filed for bankruptcy,
ended its run in June with a little more than 108,000 subscribers in 14
cities, according to its filings with the U.S. Copyright Office. While
small, Aereo grew its subscriber base by nearly 40% between the end of
last year, when it had about 78,000 customers, and June.
Aereo turned off its streaming operations when it lost a landmark
Supreme Court case versus major broadcasters, who accused it of
infringing their copyrights. Aereo had been streaming broadcast signals
over the Web to customers for a monthly fee, without paying broadcasters
any license fees.
Most of Aereo’s subscriber growth between December and June was a result
of its aggressive expansion into new cities. But even its older markets
were experiencing customer growth that cable companies, and even Netflix
Inc., aren’t seeing.
In New York, Atlanta and Boston, Aereo’s subscriber base increased by
more than 20% between December and June, the filings show. In New York,
its first market, subscribers grew from about 27,000 to nearly 33,000.
In Boston, its ranks grew from 12,000 to 14,700, and in Atlanta it grew
from a little over 10,000 to 12,400 customers. All the customer numbers
in the filings, moreover, represent paying customers on monthly plans
rather than those on free trials or weekly or daily plans, which Aereo
offered in its early days.
In comparison, Netflix Inc. grew its domestic customer base 11% to 35
million subscribers in the same time period. Comcast Corp.’s video
customer base shrank by 0.5% to 22.5 million customers.
Major broadcasters have scoffed at Aereo’s small size. CBS Chief
Executive Les Moonves said in August that Aereo got “a lot of attention
for a service that virtually nobody was using.” Skeptics have questioned
whether Aereo would have really garnered widespread consumer usage,
since broadcast TV signals are already free over the air with an antenna.
But the startup’s previously unreported growth trajectory shows the
potential and threat of streaming services for the traditional TV
industry. It’s no wonder the same broadcasters who sued Aereo have been
raising concerns in bankruptcy court that potential buyers of Aereo’s
technology could use it against them and once again infringe their
copyrights.
Major TV channel owners are torn between wanting to participate in the
streaming world and protecting their traditional pay TV model, which
relies on lucrative relationships with cable and satellite TV providers.
Aereo’s customers were likely drawn by the service’s low price point–$8
to $12 a month—for streaming local channels on a variety of devices. For
subscribers to $80-plus cable TV, the ability to seamlessly stream
channels inside and outside the home remains patchy, thanks to the
complexity of digital rights negotiations between TV distributors and
media companies. CBS’s own recently-released streaming service with just
CBS programming costs $5.99 a month and doesn’t even include NFL
football games.
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