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ZillionTV creates a new on-demand video option


03/03/2009

ZillionTV, a new kind of on-demand video service that doesn’t require a subscription fee, is launching today, looking for ISPs who want to partner in delivering the advertising-supported video service.

ZillionTV is a partnership of major movie studios and Visa, and has assembled a team of talented individuals drawn from the technology, entertainment and finance industries to create what CEO and Founder Mitch Berman calls a new video entertainment ecosystem. The idea is to have all the content available on demand from within the network, and give consumers an option for renting, purchasing or seeing videos free with advertising chosen based on the consumers’ stated interests.

“This is a totally new ecosystem for delivering on-demand video - everything is on demand, there is no hardware purchase required, no subscription and no downloading,” Berman said in an interview. “We are real instant play with TV and quality movies delivered directly to your TV.”

The content is downloaded from a high-speed Internet connection of at least 3 megabits, which is where ISPs come in. Consumers use a ZillionTV device and a motion-sending remote control – which Berman acknowledged came from Hillcrest Labs – to access on-demand content at any time.

“We have intuitive smart technology for a VUI experience – Viewer User Interface – that has to be better,” Berman said. “We use a motion-sensing remote – think of a Wii. There are no TV channels in our universe, it’s all about content, all about destinations.”

Much of that content comes from ZillionTV’s initial partners and backers which include Disney, Fox Studios, NBC Universal, Sony Pictures Television and Warner Brothers. In addition, ZillionTV continues to negotiate with other content owners, including sports leagues and franchises, to build its on-demand library, Berman said. Veramatrix is providing the encryption, conditional access, digital watermarking and fingerprinting.

“At the end of this year, we’ll have 15,000 titles up on the service,” Berman said. “It doesn’t have everything day one. That is a nit compared to all that is really out there. If you can imagine the daunting task of going round the world, building the largest content ingest system ever built. We won’t have everything Day 1 – we’ll have a real nice subset Day One.”

Where ZillionTV breaks from all other video services is in its business model and the way it plans to use advertising.

“There are three ways a consumer can watch a program on Zillion TV.” Berman said. “They can do the same-old rent, like Netflix or Blockbuster or Apple TV, at prices from 99 cents up to $3.99; also, certain content will be available for purchase. We create a digital locker – so your content ready for you to start and stop whenever you want. There’s no recording, no hard drive, it’s all in the cloud.”

But in addition to rent and buy options, consumers can get advertising-video on demand, which Berman believes will be the biggest of the three categories. Consumers will be able to watch for free, as long as they select the ads. “And it’s a pull model not a push,” Berman said. “When you set up the service, you can choose the genre of ads or brands that matter most to you. You opt in to tell us and the more you tell us, the more personalized your service becomes. Also, the more you use the service, we are watching and collecting data on your household behavior and will send you ads based on that.”

User privacy is completely protected and no user information is collected, stored and sold, Berman stressed. By partnering with Visa, Zillion TV also is creating a platform for “T-commerce,” enabling advertisers to do direct sales for an additional revenue source.

For ISPs, partnering with Zillion TV represents a way to reduce churn and build customer loyalty, Berman said.

Content creators like the service because it is a secure way to create another channel for their content and revenue, particularly as DVD sales fall off and advertising models crumble due to Digital Video Recorders and other technology that lets consumers skip ads, Berman said. Advertisers like the service because it gives them a chance to get relevant ads in front of consumers and to break out of the 30-second or 60-second spot mold and be more creative, he added.

TV Strategies analyst Steven Hawley believes the partnerships with content creators and with Visa are strong pluses for ZillionTV, but is concerned that the box required in the home “becomes another box solution, which is something consumers don’t want.” Since there is no option currently for live TV service, for things such as sporting events, Hawley believes ZillionTV will be seen as augmenting other options.

ZillionTV has one major ISP ready to go as a customer and has worked with 16 others in its ramp-up, assessing the viability of their existing networks to deliver the service. Based on those assessments, ZillionTV believes it can deliver a high-quality standard definition service at 3 Meg, and is prioritizing ISPs and their customer segments that can receive that level of service, Berman said.

“We are following along by targeting households day one that have that capability,” Berman said. “We are creating a groundswell for those who do not to upgrade. They get a terrific personalized entertainment service to go with it. ZillionTV will be used as a tool for purposes like that. The idea here is that ISP wants to touch the customer. We believe that ZillionTV is plug and play, but the ISPs are saying they’d like to come out to your house and install Zillion TV for you. They don’t have to – we are plug and play. They think touching the customer is a good thing.”

Given that many mid-sized telecom service providers haven’t jumped to develop their own IPTV offerings, something like Zillion or Sezmi, another startup that is trying to partner with broadband service providers in a very different way, may make IPTV less urgent, analyst Hawley said. “If they can partner with a satellite company for live TV and offer this for on-demand, it might be enough,” he said.



 

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