A Zillion here, a Zillion there [UPDATED]
It looks like the public will have to wait a bit longer for ZillionTV, but when it does arrive, it will be available in more places. CEO Mitchell Berman announced this morning that privately held ZillionTV Corp. had added a new element to its Internet-on-TV distribution strategy: In addition to offering its on-demand programming through Internet service providers, Zillion will serve consumers directly. To promote both approaches, Berman said the company is working with consumer electronics manufacturers to embed enabling technology in their Internet-enabled TV sets and set-top boxes (e.g., Blu-ray disc players). These devices won't become available until the second half of next year, however; nor does the company expect to move beyond trial deployments with ISPs this year.
In an interview earlier this week, Berman said ...
... the company's focus remained on striking partnerships with ISPs -- in particular, telephone companies. (Cable operators, whose pay-TV businesses are ZillionTV's main competitors, have been understandably cool to Zillion, although Berman said he continues to try to strike deals with them.) For telcos, Zillion serves two purposes: It gives them a video service they can bundle with their phone services at no extra charge, and it encourages their customers to sign up for higher DSL speeds. But Berman said Zillion wanted to be able to promote its service to everyone in the country, which led to the decision to offer its service directly to the public in areas where it has no ISP partner.
The biggest factor holding back the public launch of the service, Berman said, was the market crash. But he also said it took time to get the service to the point where it was ready for the market. "We really want to make sure we can insure a great, television-quality experience," he said. "Once we do that, then we're close. Second, it is making sure the content is really excellent. We're almost there." To maintain picture quality, Zillion has developed a distributed network of servers to store programming closer to viewers. And on the content front, the company has signed deals with 60 studios and networks, including five of the Hollywood majors (Disney, Fox, Warner, NBC-Universal and Sony) and the Weinstein Co.
Programming, however, remains a potential trouble spot for Zillion. The company plans to charge no subscription fees; instead, its customers will be able to view programs on demand with targeted advertising or by paying for them on an a la carte basis. But the studios and networks have withheld some of their more popular programming -- HBO, for example -- from TV-on-the-Internet services for fear of undermining the revenue generated by cable and satellite subscribers. That's the impetus behind TV Everywhere, Comcast and Time Warner's effort to enable networks to make programs available online only to existing pay-TV subscribers.
Berman said TV Everywhere "affects us in a very big way." Nevertheless, he said, some programmers "are saying `OK, we're going to give this a shot.' Is there going to be cannibalization? Yes. Am I trying to mitigate as much of that as I can? Yes. Do I believe that you will not only survive but prosper in this new world if you give this a chance? Yes." Yet some programmers are staying on the sidelines, waiting for Zillion to show that it can create a growing source of revenue.
Corrected at 9:08 a.m.: The original post stated that ZillionTV was a TV-on-the-Internet service from the privately held start-up Vaenco, A company spokeswoman pointed out that Vaenco's ZillionTV venture is a separate Internet-on-TV project in Canada. There is no relationship, she said, between the U.S. ZillionTV (www.zilliontv.tv) and the Canadian version (www.zilliontv.com).
-- Jon Healey