ZillionTV Not Just Another Box, CEO Says

Written by Ryan Lawler

Friday, March 6. 2009 at 04:45 PM EST 4 comments

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ZillionTV Corp. came out of stealth mode earlier this week with plans to launch a new service that will allow consumers to watch free over-the-top Internet video directly on their TV screens. But unlike some similar offerings, ZillionTV says it is bringing together all members of the digital media ecosystem -- including consumers, content owners, advertisers, and ISPs.

In an extended conversation with Contentinople, ZillionTV CEO Mitch Berman laid out how his company's product differs from the competition, and why he thinks his product will be compelling to all parties involved.

ZillionTV's pitch is pretty simple: Provide free, quality content with a good user experience, and allow the content owners and ISPs to cash in on that video with targeted advertising.

ZillionTV's set-top box, which the company says will be available in the fourth quarter, will cost a one-time fee that the company says will be less than $100. With that, consumers will gain access to about 15,000 titles by the end of the year.

ZillionTV says it has already secured video from 40 content providers, including premium content from Walt Disney Co. (NYSE: DIS), 20th Century Fox , NBC Universal , Sony Pictures Digital Inc. , and Warner Bros. Entertainment Inc.

ZillionTV expects to offer about 15,000 titles by the end of the year, compared to about 12,000 titles on Netflix Inc. 's subscription-based online streaming service, and about 40,000 titles that are available for rental and purchase through Amazon.com Inc. (Nasdaq: AMZN)'s Video On Demand service. But Berman says that 15,000 titles is just the start.

"We're going to have pretty much anything that anyone else has, and then some," Berman says. "There are licensing agreements and rights issues that keep us from offering 'everything' right away, but that 15,000 is not a static number."

While some of that content will be available for free, in an ad-supported manner, some of the videos available -- like content from NBC Universal -- will only be available for purchase. 

Not only does ZillionTV plan to offer free, ad-supported on-demand content, but Berman says that it will be able to offer better advertising to consumers, if they provide some personal information and opt in to receive relevant ads. For advertisers, the company says this will make sure that they're serving ads to those users.

Another key differentiator is ZillionTV's ability to create a direct sale relationship between advertisers and users. Visa is an investor and strategic partner, and will be used for the processing of rental and sale of videos. But ZillionTV could also leverage its payment processing to offer a direct sales channel to advertisers.

For ISPs, the ZillionTV product offers a way for them to monetize Internet video flowing over their broadband networks. The ZillionTV's set-top device and remote will only be available to broadband subscribers of certain ISP partners, who have yet to be announced.

The ISP partnership is key, because unlike other Internet-connected set-top boxes that depend on content being delivered through CDNs and over the Internet, ZillionTV's product depends on a network of infrastructure that includes local caches in ISP networks.

According to Berman, the company has four "Zmain" content distribution locations throughout the U.S., in Los Angeles, San Francisco, Chicago, and Washington, D.C. Those "Zmains" connect to "Zlocal" content caches that reside locally at the ISP level.

The architecture is similar to the distributed nature of Akamai Technologies Inc. (Nasdaq: AKAM)'s CDN, which makes sense since ZillionTV's senior vice president of operations, Andrew Robinson, was Akamai's principal architect after joining the company in the Netli acquisition.

Even with its ISP partnerships and local ISP caches, ZillionTV requires a minimum broadband connection of about 2.7 Mbit/s. Berman says that the video is encoded for standard-definition H.264 streams that are delivered at bit rates of 1.5Mbit/s. The additional bandwidth is used primarily for overhead, so that normal computing activity won't disrupt the customer experience.

For ISPs, partnering with ZillionTV is one way to provide extra value to customers and to derive extra revenue from Internet video that is being delivered over their broadband networks. ZillionTV has agreed to share revenue with ISPs as well as content providers, which is something that existing Internet video services -- like Netflix, Amazon, iTunes, and VUDU -- don't do.