Zillion TV, a new entry into the internet video market, emerged from stealth mode over the weekend. Contentinople has a nice article, and the mainstream press has it all over the place (LA Times, Forbes). The startup has powerful backers and partners and seem to be heading for a quick start, planning to have 15,000 titles online by the end of the year. I like the name, but I'm somewhat skeptical about the business model. Here are the main features as I currently understand them.
- Internet video is streamed on demand to the television.
- Users buy a set top box for under $100 and need a 2.7Mbps connection minimum.
- Users can pay per view like iTunes, or you can opt in and watch for free with relevant advertising
- It only works with some ISPs (unannounced), those ISPs will host local server caches
- Revenue is shared with both content providers and those friendly ISPs
- They're building their own CDN.
Clearly, Zillion TV is eschewing the confrontational 'network neutrality or bust' approach for a more cooperative solution to the internet TV puzzle. They are seeking to be the preeminent middleman, sitting right in the middle of an already tense square whose corners are the users, advertisers, ISPs, and content providers. That of course means a lot of people have to say 'yes' to make this work, and they are only going to say yes if they make money from it. More money for so many partners means less money for Zillion TV - hence the skepticism on my part.
Technology-wise, the company is building its own CDN, looking to mirror parts of Akamai's distribution model by having their partner ISPs host local caches of servers. The expense of building your own CDN like this can only be justified once you have a heck of a lot of traffic, that's why we mainly hear about folks like Google and Amazon building rather than buying CDN services while others like Apple and Netflix just buy it wholesale. For Zillion TV to build their own before they have any customers is just a bit aggressive, yes?
Ah well, the key is always the customer experience, empowering users to do something new that they find sufficiently interesting and valuable to drive a real migration. Whoever figures that out will win regardless of the early business models, and it is early in the game yet. As long as internet video simply replicates what people can already do, the industry will mainly excel at eating venture capital dollars, euros, and yen.
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