Aereo CEO: Service will turn a profit before turning in 1M subscribers

The upstart online TV service will have a "fabulous" business at 1 million users and an "extremely fabulous" one at 5 million, but registrations need only be in the hundreds of thousands for it to be profitable, its CEO says.

Aereo's CEO Chet Kanojia talking to a group of start-ups in New York
Founder Chet Kanojia, speaking to a group of New York entrepreneurs, said Aereo needn't have millions of subscribers to be profitable. Joan E. Solsman/CNET

NEW YORK -- Aereo Chief Executive Chet Kanojia is keeping the lid tight on how many people have joined his service to stream local TV broadcasts over the Internet, but he doesn't need millions of them to turn a profit.

Kanojia said that Aereo would have a fabulous business at 1 million registered users and an "extremely fabulous" business at 5 million. But it would be profitable with hundreds of thousands of subscribers, he said, speaking to a group of local entrepreneurs at a Startup Grind event in New York.

It stands in sharp contrast to a standard mentality of burgeoning tech companies to pursue growth at the expense of the bottom line in order to carve out their reach. By comparison, Pandora reigns on top of the Internet radio market with more than 200 million registered users but has posted only a couple quarters of slim profit, though it operates in an industry with very different cost structure than Aereo.

Kanojia has previously said that he hopes that one out of every four people will be using Aereo in the next five to seven years. At today's population, that would represent 78.5 million people. Netflix, currently the biggest subscription service for streaming video, has nearly 30 million domestic streaming members.

Aereo doesn't disclosed its user numbers.

The company, which is backed by IAC Chairman Barry Diller, uses antenna/DVR technology to let consumers can watch live, local over-the-air television broadcasts. It's a capability that has provoked the ire of from broadcasts giants including CBS, ABC, Fox, NBC Universal, and Telemundo, which are suing Aereo for violating copyrights and skirting retransmission fees. (Disclosure: CBS is the parent of CNET.) Aereo says its practice is legally legit, since each user has their own dedicated antenna.

So far, the broadcaster's arguments against Aereo have failed to win the support of courts based in New York, with the U.S. Court of Appeals for the Second Circuit denying their request to halt Aereo's business while the case goes to court and most recently refusing to reconsider that decision again .

Though it has kept quiet about its usership growth, Aereo has been rapidly deploying to new cities. In January it said it would move to 22 total cities across the U.S. over the course of this year . It now operates in New York, Boston, and Atlanta, with Chicago, Salt Lake City, Dallas, Houston, and Miami on the way.

 

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