Sezmi Tells L.A. Story

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Startup Sezmi this week will kick off a customer pilot in Los Angeles, delivering live feeds of 23 cable networks, 50 local TV channels, video-on-demand and Web video through its DVR set-tops using a combination of wireless broadcast spectrum and Internet delivery.

"We have L.A. fully operational," Sezmi co-founder and president Phil Wiser said.

Sezmi -- which is planning to launch in other markets in 2010, after previously hoping to debut the service a year ago -- is hoping to lure subscribers of cable and satellite TV services by touting its personalization features and lower subscription costs.

"We're the first company to integrate Internet content with this on-demand offering and premium cable programming," Wiser said. "It's the experience -- the integration of al this content, that we're delivering for a significantly lower price."

The cable networks participating in Sezmi's L.A. launch are: TBS, TNT, USA Network, Bravo, CNN, Headline News, Discovery Channel, Comedy Central, Planet Green, MSNBC, VH1, Cartoon Network, Oxygen, CNBC, MTV, Nickelodeon, TLC, Science Channel, Syfy, Animal Planet, truTV, Boomerang and TCM.

Sezmi's guide

Sezmi will deliver the linear TV feed of each of the cable networks, and will also provide related VOD content.

In addition to the L.A. pilot launch, the company is announcing that it has raised $25 million more funding, bringing its total raised to about $75.5 million. Investors in the latest round of financing include previous investors Morgenthaler Ventures, Omni Capital, TD Fund, Index Ventures and Legend Ventures, plus a new "strategic" investor, which Sezmi did not identify.

For the three-month test in L.A., Sezmi will select participants from those who apply and provide them a free subscription to the television service, including the cable channels. Sezmi is targeting about 1,000 households for the trial.

The commercial service will be available in two packages: Sezmi Select, $4.99 per month for the broadcast-only service plus access to some VOD and Web video content; and Sezmi Supreme, $24.99 per month, which includes the full cable subscriptions.

When testers roll off the pilot, Sezmi will offer them a 50% discount on the DVR set-top and custom antenna hardware, which carries a list price of $299, if they wish to continue receiving the service. The set-top is manufactured by Taiwan's Tatung.

Sezmi's core channel lineup comprises free, over-the-air TV and multicast networks. In L.A., this includes local broadcasts from ABC, CBS, NBC, Fox, The CW, PBS, Univision, Telemundo, Universal Sports, AccuWeather, Qubo, ION, Telefutura, LATV, MTV Tres and KCAL.

In addition, Sezmi will offer more than 6,000 movies and TV shows for rent or purchase, a library that will grow to 15,000 titles in 2010, Wiser said.

Studios supplying content include 20th Century Fox Home Entertainment, Lionsgate, Paramount Pictures, Sony Pictures Home Entertainment, Universal Studios and Warner Brothers, as well as independent studios. Sezmi also partnered with Sonic Solutions to provide access to a broad selection of additional content powered by Sonic's Roxio CinemaNow movie service.

Movies are typically available for $3.99 rental; TV episodes can be purchased for $1.99, "in line with the market," Wiser said.

Sezmi delivers the cable programming and VOD using a combination of Internet bandwidth and multicast spectrum leased from TV broadcasters.

Sezmi is using spectrum from four L.A.-area TV stations: KOCE (a PBS member station in Huntington Beach, Calif.), KRCA (a Spanish-language station owned by Liberman Broadcasting), KAZA (owned by Pappas Telecasting and affiliated with Azteca America) and KDOC (an unaffiliated station owned by Ellis Communications).

Ultimately, Sezmi's business model is to sell the service through wireline and wireless Internet service provider partners, which will act as the customer point of contact. Wiser said the company has agreements in place with telco partners but he declined to identify them, saying those will be announced in early 2010.

"The purpose of the pilot is to really refine our training, and scale up our understanding of communicating with the consumer," Wiser said.

The startup emphasizes its multiuser features and personalization capabilities, in contrast to cable or satellite TV services. The Sezmi (pronounced "SAYS-me") set-top can automatically record, organize and recommend shows for each family member based on individual preferences.

Pressing the "mi" button on the Sezmi remote launches a user into a custom view of his or her own favorite content, along with recommendations based on viewing patterns. Sezmi also integrates a variety of Internet content including YouTube and video podcasts.

Sezmi, founded in June 2006 under the code-name Building B, last fall conducted a technical test in Seattle that simulated access by 1 million subscribers. "We wanted to understand how the service would perform," Wiser said.

The company currently counts more than 100 employees, including outside contractors, according to Wiser. About a year ago, Sezmi laid off 20 of its 100 employees before it announced a $33 million round of funding.

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