News

Hybrid Vehicle

5/03/2008 2:00 AM Eastern

Cable may soon find a new hybrid TV competitor nipping at its flanks.

Sezmi — the startup formerly known as Building B — is promising local television broadcasters and Internet-service providers a way to get into the multichannel video business.

This summer, Sezmi (pronounced “SAYS-me”) will initiate technical trials of its system in three markets and plans to launch commercial service with partners by the end of 2008.

The company aims to deliver high-definition digital broadcast signals, plus HD cable programming and other video over broadband and leased TV airwaves, to a set-top that ties it all together with a slick interface.

And, Sezmi claims, it will do that at a price point that undercuts existing cable services. “The main complaint from consumers is that cable is too expensive,” Sezmi president Phil Wiser said. “People don't think it's a good value.”

The company's other big selling point is that its Internet-enabled set-top and antenna system will deliver truly personalized TV. Sezmi features up to four different profiles for each member of the household, with their own screen layouts and customized lists of favorite shows, genres and channels, as well as social-networking features to share recommendations and playlists.

By comparison, Wiser cracked, current interactive program guides are like “looking at a spreadsheet to find something interesting to watch.”

But before it can launch commercially, the company still has to put a lot more flesh on the bones of an intricate business plan.

Sezmi has not announced any partnerships with content providers; the company claimed those “will be rolling out over the next several months.”

Its goal is to provide all the free-to-air local broadcast HD channels in a given market, plus 30 to 35 cable networks. That, according to Sezmi CEO Buno Pati, will allow the service to provide more than 85% of the TV content people watch.

The enticement for programmers to cut deals with Sezmi, Pati said, is that the system can deliver and measure TV ads based on customer profiles.

Broadband Resellers

Sezmi plans to resell the service through Internet-service provider partners, which will act as the customer point of contact — but it has no announced ISP deals, either. In addition, it hopes to line up two or three local broadcasters in each market from which Sezmi will lease digital TV spectrum.

The startup's “FlexCast” distribution model depends on both over-the-air and broadband-delivery mechanisms. Popular cable programming, such as a live baseball game, would be sent over the broadcast airwaves. Live feeds of less-popular cable channels, along with on-demand video and Internet content like YouTube clips, would flow down the broadband pipe.

Wiser wouldn't disclose Sezmi's three trial markets (although he said New York is not among them), nor would he name broadcasting or broadband partners for those trials.

The company's press materials include a prepared comment from Colleen Brown, CEO of Seattle-based Fisher Communications, which operates 13 full-power TV stations in the Pacific Northwest. “Sezmi's innovative platform enables broadcasters to enhance their core service, while creating new revenue opportunities,” Brown said.

Windstream Communications CEO Jeff Gardner also supplies an encouraging quote in Sezmi's release, saying the service offers telecommunications providers the ability to deliver a triple-play without “a significant capital infrastructure investment.” The telecom provider, which operates 3.2 million access lines in 16 states, currently resells Dish Network satellite TV service.

A Sezmi spokeswoman said Fisher and Windstream are not partners. Rather, “Fisher and Windstream have offered comments as industry leaders who support what Sezmi is trying to accomplish,” she said.

In mid-April, Sezmi announced a partnership with Harris, under which the startup will locate its network operations at Harris' network-operations facility in Melbourne, Fla. Sezmi and Harris said they'll “enable broadcasters to immediately leverage their digital investment and strengthen their core business” by sending Sezmi's programming over their digital TV spectrum. Sezmi expects to offer local stations promotional opportunities as part of those deals.

Nonlinear Set-Top

The Sezmi set-top is designed for digital video recording and on-demand viewing. The box, manufactured by Taiwan-based Tatung, has 1 Terabyte of storage, enough for 1,000 hours of standard-definition video. The service uses SecureMedia's content-encryption system.

But will consumers really go for yet another set-top box in the living room?

Ultimately, Wiser said, Sezmi is different from other broadband-to-the-TV plays like Apple TV, because it will offer programming consumers expect to find in a multichannel service.

“We knew we had to deliver a real TV experience,” he said.

Source: Company reports
Business: TV service that delivers live and on-demand video using a combination of terrestrial digital broadcast signals and broadband.
Employees: 70
Headquarters: Belmont, Calif., with offices in Los Angeles and Ft. Lauderdale, Fla.
Founded: June 2006
Funding: $17.5 million
Investors: Morgenthaler Ventures, OmniCapital Group, Index Ventures, TD Fund, Legend Ventures

September