Sezmi to scale back service in Los Angeles
Sezmi, a low-priced competitor to cable TV, plans to scale back its service drastically in Los Angeles -- the market where it was testing its most ambitious product offering.
In a notice to subscribers Friday evening, the company announced that it was shutting down its Sezmi Select Plus tier, a $15-a-month option that consisted of TNT, Nickelodeon and 21 other cable networks. Instead, it will stick with the $5-a-month offering that consists of local broadcast stations, a video-on-demand service and a (very) limited selection of video from the Web.
The idea behind Sezmi was to compete with other pay-TV offerings by offering not just a much lower monthly fee, but also a much different experience. Much of the service is geared toward enabling, even encouraging, people to watch programs on demand instead of channel surfing. The required $150 worth of hardware includes a high-capacity digital video recorder, which the Sezmi software tries to fill with programs that match the viewer's tastes. The service also provides access to a large library of movies and TV programs for purchase or rental.
That aspect of Sezmi won't change with the elimination of the Select Plus tier. Now, L.A. joins the 35 other markets around the country where Sezmi has offered only the basic tier. But with no access to any live cable networks, it will be hard for mainstream consumers to see Sezmi as a real alternative to cable or satellite TV. Instead, it seems more like a lower-priced competitor to TiVo -- an "over-the-top" offering that's built around broadcast TV, a DVR and Web-based video on demand.
Dropping Select Plus could make it easier for Sezmi to expand its footprint, though. The company's plan was to use local TV stations (and, to a lesser extent, the Internet) to broadcast cable networks, avoiding the enormous up-front costs of stringing wires to subscribers' homes. To do so, however, it had to strike airwave-sharing deals with multiple stations in each market.
Another challenge for Sezmi was adding major cable programmers to the Select Plus tier on terms that fit its model. Among the major missing pieces were ESPN, regional sports networks and commercial-free movie channels. The fees demanded by those channels would have forced Sezmi to collect more from subscribers -- possibly from all subscribers, as the owners of some of those networks resist being moved into niche tiers.
Not surprisingly, founders Buno Pati and Phil Wiser put the company's move in a more positive light in Friday's notice to subscribers:
In 2010, we have been pleased to see our vision for a value oriented TV alternative continue to accelerate. In fact, the pace at which we can deliver more TV and movie programming through the Internet has exploded. This ongoing change will enable us to deliver the Sezmi experience to a nationwide base of TV consumers faster than we could otherwise. We can also provide access to more programming with more flexibility in viewing as we expand our content offering over time.
They can move faster, but can they persuade more people to sign up with less programming to offer?
-- Jon Healey