ZillionTV Streams TV Content, Lets Viewers Choose Ads

A new streaming video startup, ZillionTV, has entered the crowded digital television sector.

The Sunnyvale, Calif., startup, which is backed by Warner Bros., Sony Pictures, NBC Universal, Disney, Fox, Visa, Sierra Ventures, Concept Ventures and Blu-ray chip maker Sigma Design, expects to launch its new service nationally by the end of the year.

For now, ZillionTV is available in beta in several U.S. markets.

Set-Top Box

Here's how it works: Consumers plug the company's set-top box into their televisions in the same way they would a DVD player and turn it on. Up comes the ZillionTV interface.

The consumer is then asked to select TV, movie and music genres as well as their preferred types of advertising. Once that's done, the consumer can start watching content, which is streamed directly to their television.

Consumers need at least a 3 megabits per second Internet connection to view standard definition content and at least a 7 megabits per second Internet connection for high-definition programming.

The ZillionTV library will launch with about 15,000 movie and television titles.

Pick Your Poison

ZillionTV's offering is radically different from its competitors, said ZillionTV President and CEO Mitch Berman, who has worked at HBO, the Sky Network in New Zealand, E! The Entertainment Channel, OpenTV and C-Core.

"We don't sell boxes and we don't do subscriptions," Berman told the E-Commerce Times.

Instead, ZillionTV's revenue model is based on revenue sharing between content providers, Internet service providers and advertisers. However, the startup said it will charge a one-time service fee to consumers of less than US$100.

In addition, consumers are targeted with ads based on their pre-selected tastes and build points toward rewards such as discounts and promotions at various businesses. For example, if a single man in New York selects "men's clothing" as a type of preferred advertising, he may receive ads from the Gap. If he builds up enough points, he may be able to get a discount on Gap clothing.

"What he won't get is diaper ads or things he doesn't wan to hear about," Berman said.

An Expanding Library

The startup will have a library of about 15,000 titles by the end of 2009, but that library will expand as time goes on, Berman said.

"We're building what we believe to be the largest content-ingest system in the history of television," he said.

However, competitors such as Roku already have far more content to offer consumers. Thanks to recent deals with Amazon.com (Nasdaq: AMZN) and Netflix (Nasdaq: NFLX), Roku has about 40,000 videos in its library.

"We don't have everybody yet," Berman said. "We have Warner, Sony Pictures, NBC Universal, Disney and Fox. I didn't mention others that are out there. Are we talking to them? You bet we are. These are the five champions who came in early. They have an equity stake in our company."

Streaming Video Just Getting Started

The market for streaming video remains nascent and fragmented, which is good for consumers, according to Ben Bajarin, director of the consumer technology practice at Creative Strategies Group.

"I'm encouraged to see new products in this category enabling these types of experiences," Bajarin told the E-Commerce Times. "It shows that a lot of people in the industry are looking at new opportunities for video consumption. Online services are really starting to take share with some insights as to how it will make its way to the television."

What offerings like ZillionTV and Roku offer most is convenience, he said.

"What it comes down to is people are busy, and they like their TV content," Bajarin said. "But the fact that the cable operators and networks have had a very close architecture that dictate how people view content. Now, that's starting to open up. You as a consumer want to consume content on your own time and on your own medium without people dictating how and when you do that."