Barry Diller and IAC Back Aereo to Bring Live TV to Mobile Devices

2/15/12Follow @jpruth

In a world increasingly distracted by mobile devices, television broadcasters are searching for new ways to keep their shows in front of the audience. Rather than fight the mobile trend, TV station owners such as Hearst Television plan to bring their content to handheld devices in the somewhat near future. However, New York-based IAC (NASDAQ: IACI), an Internet heavyweight whose businesses include Ask.com, Match.com, and The Newsweek/Daily Beast Company, has a different approach: it is getting in on the action by funding the developers of a technology that could shake up the entire television market.

On Tuesday morning IAC chairman Barry Diller introduced Aereo, an Internet-based television service his company has backed in a $20.5 million Series A funding round. In addition to IAC, prior investors FirstMark Capital, High Line Venture Partners, First Round Capital, Highland Capital Partners, and others also participated in the round. Thus far Aereo has raised $25 million in total funding. The company was founded in 2011 as Bamboom Labs; it is headquartered in Long Island City with a development team based in Boston.

Diller spoke at the event at IAC’s headquarters in the Chelsea section of New York about the evolution happening in the television market as social networking and other services are brought to the family room. “I’ve always thought this alternative distribution method through the Internet would be a healthy thing as media [became] concentrated,” he said. Diller described Aereo’s technology as a way to radically transform the way the audience receives television.

“We are setting out to build access to live television on the Internet,” said Aereo founder and CEO Chaitanya “Chet” Kanojia. He said broadcast television shows were the initial focus, but he left the door open for further development of his service.

Aereo’s technology feeds live programming (but not cable or satellite channels) to its subscribers’ mobile devices. Basically it lets users with wireless Web-enabled smartphones, tablets, and computers watch live broadcasts and also record shows via an Internet-based DVR. While wireless providers such as Verizon Wireless have streamed live video of select channels and shows such as the Super Bowl to their subscribers, Aereo provides continuous access to major networks and local broadcasters to its users.

The increasing availability of high-speed Internet access and growing use of digital devices, Kanojia said, opened up the opportunity for Aereo’s technology to land in the public’s hands. “We think the market is ready, given the level of broadband penetration that exists and the amount of time people are spending on digital technology,” he said.

The service is currently available on an invite-only basis and only in the New York area. The general populace in the city can sign up to use Aereo starting March 14. For a $12 monthly subscription, users will be able to watch shows from networks including ABC, FOX, NBC, and CBS on their Web-enabled devices. The platform can also stream the content through Internet television services such as Roku and AppleTV.

Chet Kanojia demonstrates Aereo.

During the press conference, Kanojia demoed the technology on his iPad by bringing up previously recorded broadcasts as well as a live episode of “The Dr. Oz Show”. He also displayed how the shows can be pushed from the mobile device to a Web-enabled television. Aereo uses the HTML5 language to make the platform available across Android and Apple iOS devices. “All of these devices will look the same [with the service],” Kanojia said. “There are no custom apps per device.”

Aereo has set up an undisclosed number of antenna arrays around New York City to serve its subscribers. Kanojia said each subscriber must be in their home city in order to access the Aereo service.

Even as Diller and Kanojia talked up Aereo, there are other players out to bring live television to mobile devices. Mobile Content Ventures, a consortium of television broadcasters, is developing a service called Dyle to deliver live shows to Android and iOS devices sometime this year. Roger Keating, senior vice president of Hearst Television, spoke about Dyle at January’s Digital Media Center event. And some premium television service providers have already put television content on mobile devices. Cable provider Cablevision and satellite television service DirecTV both offer iPad apps that let subscribers view live television on the tablets, but the shows are only accessible when they watch at home.

That home-based limit may play into Aereo’s favor. While Aereo users are constrained to their home cities they can at least leave the house when they are using the service.

Kanojia is no stranger to providing technology to the television industry. He was founder and CEO of Navic Networks, a Waltham, MA-based provider of audience measurement tools to help target television ads; the company was acquired in 2008 by Microsoft.

Though Aereo is eager to make its presence known on the TV landscape, few hard details were shared regarding where the company might introduce its service after New York, how broadcasters may react to this technology, or what new functions may be added in the future. The company may—or may not—consider offering, for an additional fee, more DVR storage space beyond the 40 hours currently allotted to each subscriber. The goal at the moment seems to be to offer simplified features to get consumers interested in the technology.

Aereo does sound open to discussions with cable broadcasters down the road. “Our goal is to create a transparent platform where that dialogue can happen,” Kanojia said, “as opposed to us creating mega-packages or recreating cable.”

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

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