The courts have kept the lights on at Aereo so far, but it’s not clear that Aereo itself can afford the power bill. According to The Wall Street Journal (subscription required), the online start-up company is facing massive electricity costs thanks to the tiny antennas it has to keep running for every subscriber on its video streaming roster. In the Journal’s analysis, Aereo could end up paying $2 million a year in New York alone if it scales up to the 350,000 subscribers CEO Chet Kanojia says he can support.
Meanwhile, Aereo also announced today that it will launch in the Denver metro area on November 4th. That makes nine markets for the video company, which also debuted in Detroit yesterday, that has said it intends to cover 22 markets by year end.
Kanojia indicates he has some ideas for dealing with the power dilemma. One is to use fuel cells for power generation. Another, and seemingly more likely option, is to combine Aereo’s antennas with its transcoding equipment. Like the cable operators, Aereo is discovering that relying on denser, multi-purpose equipment can (eventually) reduce both cap ex and operating costs.
As for Aereo’s broader business model, the Journal reports that the company is in talks with wireless and wireline broadband providers about bundling Aereo with Internet service. I might have scoffed at that idea a year ago, but with even Comcast and Cox contemplating new broadband and IP video streaming bundles, I can certainly see other ISPs looking favorably on an Aereo partnership.
AND beyond direct partnerships, cable companies have now made it clear that they’re interested in Aereo’s approach to retransmitting broadcast TV signals. The cablecos could avoid spending billions of dollars in content licensing fees if it turns out that Aereo’s technology is ruled legal by the Supreme Court. (Still a big if) According to Bloomberg, Time Warner Cable, Charter Communications, and DirecTV have all said they would like to follow Aereo’s lead if the courts allow it.