ZillionTV Delays Launch, Plans To Test Direct-To-Consumer Service

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ZillionTV -- the Internet TV startup backed by Hollywood's biggest movie studios -- has delayed its commercial launch until the second half of 2010 and concluded that its original strategy of coming to market with broadband service providers won't give its ad-supported play enough reach.

The company is embarking on an "expanded distribution" strategy that will include pilot trials of a direct-to-consumer offering, while maintaining the primary focus on continued partnerships with telcos, CEO Mitch Berman said. In addition, ZillionTV is hoping to land deals with consumer-electronics manufacturers to embed the service into Internet-connected devices.

"Going through [service providers] is a good idea -- we have a motivated partner who can deliver a service with guaranteed quality," Berman said. "But we can't cover the entire country... We can expand in cracks around the country where we don't have partners."

ZillionTV CEO Mitch Berman

The Sunnyvale, Calif.-based company's investors include Walt Disney Co., 20th Century Fox Television, NBC Universal, Sony and Warner Bros., credit-card issuer Visa, set-top chip manufacturer Sigma Designs and several venture-capital firms (see ZillionTV Thinks Broadband TV Wants To Be Free).

In ZillionTV's original model, ISPs would offer a broadband video-on-demand service -- with a free set-top box and remote control -- as an enticement for subscribers to move to higher-speed tiers. The service is supposed to provide free, ad-supported premium video content, as well as rental and download-to-own options. ZillionTV previously said it hoped to launch the service with upwards of 15,000 titles.

The company hasn't announced which telcos it's working with, but ZillionTV's first major ad partner is MillerCoors, Berman said. He added that the company now has 60 content partners, including the five studios that are investors and The Weinstein Co., up from 30 in March.

The ISP version of ZillionTV's service is currently in a closed beta phase of testing and the company now expects it to become available to consumers nationwide in the second half of 2010. Originally, it had hoped to launch before the end of this year. The startup expects to start direct-to-consumer pilots in the fourth quarter of 2009 in select markets.

The direct-to-consumer service will, like the original ISP version, include no subscription fee or charge for the hardware, but the service will carry an "activation fee" of $100 or less.

When ZillionTV launched in March, Berman said at the time, "We don't intend to go over the top." That's still true in the sense that the startup will avoid competing with its ISP partners, Bernstein maintained. ZillionTV will determine if prospective viewers are in a franchise area covered by one of its ISP partners; if not, the direct-to-consumer offering will be made available to them.

"The goal is to give access to everybody in country," Berman said.

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