Sezmi wants to deliver a more personalized and economical multichannel video alternative to cable TV, in the same way JetBlue successfully challenged the major incumbent airlines, the startup's president Phil Wiser said.
"We're going to super-serve and over-serve the coach-class consumer with a better experience and a better value" than current pay-TV services, said Wiser, speaking on a panel at "Future of Television East" conference here Thursday.
Sezmi this week is kicking off a customer pilot in Los Angeles of service that provides live feeds of 23 cable networks and 50 local TV channels, video-on-demand, and Web video through its DVR set-tops. The service is delivered through a combination of multicast broadcast spectrum leased from local TV stations and Internet bandwidth.
Wiser said the startup, previously known as "Building B," realized early on it would be critical to incorporate real TV instead of delivering only on-demand TV shows, movies or video clips.
"Our view... was that being complementary to existing pay-TV services is just not going to cut it," he said.
After the initial pilot period, the Sezmi Supreme package, which includes the 23 cable networks, will cost $24.99 per month. "I think there's an opportunity to drive an offering into the market that isn't at a $100 per month price point," Wiser said.
According to Wiser, the challenge for Internet-based set-tops like Boxee and others aspiring to provide an alternative to traditional TV is that content providers are not going to abandon their existing dual revenue streams in favor of an advertising-only service.
Boxee chief creative officer Zach Klein, who was also on the panel, acknowledged, "There are only so many content providers willing to work with companies such as ours."
But Klein defended the service as being akin to Apple's iPhone App Store for television, allowing developers to provide new ways to consume content on its platform.
"We've learned a lesson from the RIAA," Klein said, referring to the music industry trade group that has waged a losing battle against online digital music piracy. "The consumer is going to find the path of least resistance -- why not make that path a valid one, and give the consumer an opportunity to buy that content on-demand?"
He added, "We're only going to make money if content owners make money."
Consumer Electronics Association chief economist Shawn DuBravac said he expected 60% of TVs shipped by 2013 to have an Internet connection. "That opens up a Pandora's Box, if you will," to provide content from virtually any Internet source to the television screen. DuBravac added, though, that there's no reason cable and telco TV operators won't be able to roll out services that deliver online video to the TV, as well.
The panel was moderated by Kurt Scherf, vice president and principal analyst at Parks Associates. According to a recent Parks Associates forecast, 200 million Internet-connected consumer-electronics devices will be shipped per year by 2013. And, Scherf added, "I've been told by consumer electronics manufacturers our forecasts are too low."
However, Scherf said, "we don't see any evidence of cord-cutting."
The issue isn't cord-cutting per se, said Bernard Gershon, president of media consulting firm Gershon Media and former ABC/Disney executive. Rather, the risk to pay-TV providers is that younger consumers will never establish the cord in the first place.
Cable operators and programmers will need to adapt to an on-demand world, he noted later: "Linear TV, except for live sports and news, is dead."
Sezmi's Wiser agreed that everything on-demand is where television is headed. But he argued that live TV is still a critical part of the equation today: "I challenge anyone to go to mainstream America and say, ‘Replace everything you have with Hulu' or whatever."