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Sezmi says hello to Los Angeles

November 16, 2009 |  3:01 am

Sezmi, over the top, cable bypass, online TV, Hulu, TV Everywhere Angelenos unhappy with the cable or satellite TV offerings in their neighborhoods will have a new, much less expensive option today: Sezmi, a novel combination of over-the-air broadcasting and broadband programming. The company is launching a trial run here in anticipation of a much broader rollout by March, providing free equipment and service for about three months to those who participate. (You can sign up at Sezmi's website.) Even after the free trial ends, the price will be far below competing pay TV services: just under $5 a month for local broadcasts, Internet channels and access to pay-per-view services, and an additional $20 a month for more than 100 cable TV networks. Sezmi has some issues -- some popular cable networks aren't on board, at least not yet, and its selection of Web programming is far too limited -- but it also offers some innovations that push TV service in the direction viewers want it to go.

Sezmi keeps its costs down by relying on other companies' infrastructure -- phone or cable companies' broadband pipes and local broadcasters' digital transmissions -- to deliver programming to people's homes. It's also counting on as-yet-undisclosed retail partners to cover some of the cost of acquiring new customers. And rather than having to send installers out to set up the service, Sezmi asks people to install the two required pieces of equipment themselves -- a task the company says is painless and brief. Those two pieces of equipment are a "smart reception system" the size of a bookshelf speaker that tunes in programming from the air and the Internet and a set-top "digital media player" that delivers that programming to a TV screen or records it for later viewing, à la TiVo. Customers can lease the equipment for an undisclosed monthly fee or buy it for $299 (participants in the L.A. trial will get a 50% discount). At this point, though, Sezmi users will need to obtain a set-top box for each TV in their home, which suggests that most customers will rent equipment instead of buying.

Sezmi, over the top, cable bypass, online TV, Hulu, TV Everywhere I saw a brief demonstration of Sezmi last week and was impressed by the picture quality and the user interface. The brains of the service reside in the set-top box, which makes aggressive use of its 1-terabyte hard drive to record shows automatically that its users like or might like. The service also expects to have well over 10,000 movies and TV shows available on demand -- some of them on a pay-per-view basis -- when it formally launches. The result is that the "My Shows" section of Sezmi's on-screen guide should have plenty of personalized on-demand programs to offer in addition to whatever happens to be airing live. Among the other nice features: the box integrates programs from the Web into its recommendations, and it can create separate profiles for each user in a household so that Dad's affection for news programs doesn't pollute Junior's lineup of sci-fi fantasies. The company also plans to give networks and advertisers room in the program guide to create expanded lists of content that can be viewed on demand, although that feature won't be included in the local trial.

Now for a few reasons to be skeptical about Sezmi's prospects:

The trial lineup doesn't include any of Disney or Fox's cable networks, or any regional sports networks or premium movie channels. Company co-founder Phil Wiser said the trial offers just a snapshot of what will be available when the company does its official launch, and that it's still in talks with content providers. I have trouble seeing how Sezmi could compete with ESPN and the Disney Channel, Fox's news and sports channels, FX, HBO and Showtime. But I also wonder, if they add those channels, how they could stay at $25 all-inclusive price.

The service transmits cable networks over the air, through digital TV frequencies leased from a few local broadcasters. They can use those airwaves much more efficiently than broadcasters can, enabling them to transmit multiple high-definition streams in a single channel. But Sezmi doesn't have nearly as much bandwidth at its disposal as cable operators do, which means the amount of high-definition programming may be more limited. The company wouldn't say how much HD it would deliver, just that "the most popular content on the most popular networks will be in HD as available."

Sezmi, over the top, cable bypass, online TV, Hulu, TV Everywhere The reliance on over-the-air transmissions for much of the programming means that homes with poor TV reception may not be able to use Sezmi. Company officials say that the "smart reception system" is the highest- performing over-the-air receiver ever built, using multiple technologies to grab signals more reliably than the typical antenna. In fact, Chief Executive Buno Pati said, the company expects to be able to serve 80% to 85% of the customer base in Los Angeles. That's important because the city is a key market for Sezmi, with the country's highest number of households that do not subscribe to cable or satellite.

The service takes the walled-garden approach to the Internet, providing access only to the sites it chooses. And at this point, the lineup consists only of YouTube, Crackle, OnNetworks and an array of podcasts. That's far too thin a sampling of the bounty available online. Company president Phil Wiser said that, as with Sezmi's selection of cable channels, the lineup of Web programming will be broader at launch.

Finally, the company may emphasize personalized program guides and on-demand viewing, but when it comes to pricing, Sezmi sells channels in bundles that cannot be customized. That's not much of a change from cable or satellite services, although Sezmi's prices are far lower. Pati and Wiser put a more positive spin on the company's approach, saying Sezmi planned to offer only the most popular cable networks in its streamlined bundles. The advantage that Sezmi has TV-over-the-Internet competitors, Wiser said, is that it offers networks "economics that are in line with what they have today" -- a cut of Sezmi's subscription fees, in addition to the revenue the networks generate from advertising. That's something Hulu can't do, at least not yet.

Sezmi's investors don't seem to mind any of these issues. The company just announced that it has raised an additional $25 million from previous funders Morgenthaler Ventures, Omni Capital, TD Fund, Index Ventures and Legend Ventures, as well as one undisclosed new backer.

Images courtesy of Sezmi

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division.

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