Will today’s buzzy Internet TV story ever happen?
A new company called ZillionTV plans to offer a $50 set-top box that can access 15,000 Web TV shows and movies later this year. You can read more about it at many pre-briefed publications; we’ve chowed down on this thousand-word profile from Wired.
The key to ZillionTV’s business: Unlike other Web video on demand services like Netflix (NFLX) and Apple’s (AAPL) iTunes, it’ll only be available to people whose Internet service providers have made a deal with ZillionTV. That is, they want your cable or phone company to buy into the service and offer ZillionTV’s video an express lane to your house.
But we’re curious why any major Internet provider would do this. In the U.S., most people get their Internet service from a cable or phone company… most of which already sell lucrative digital cable/on-demand services.
Why would Comcast (CMCSA), for instance — which is already losing cable TV subscribers — make a deal with ZillionTV to offer me a set-top box for video-on-demand… when Comcast already rents me a set-top box with video-on-demand?
Wouldn’t it be in Comcast’s best interest to just duplicate (or outdo) ZillionTV’s content library — something they could do easily — instead of encouraging me to spend time with another company’s service and equipment? Same goes for Time Warner Cable (TWC), AT&T (T) and Verizon (VZ), all of which offer digital cable service in many markets.
Then there’s the content question.
ZillionTV says it has more than 40 deals with content providers, including Disney (DIS), Sony (SNE), NBC (GE), Fox (NWS), etc. But all of those companies still get the majority of their TV revenue from TV advertising and cable subscriber fees — neither of which ZillionTV will be able to provide them with. Meanwhile, Internet advertising and digital subscription fees, where ZillionTV will try to make money, are still very theoretical markets.
So, sure, maybe ZillionTV has deals with all of these companies. But will they provide them with anything worth watching? Or anything better than you can already get on cable video-on-demand, or the Web video services Comcast and Time Warner Cable have already announced? Or just old “catalogue” content?
Maybe ZillionTV will somehow get magical buy-in from content providers, Internet service providers, etc., and come out with a brilliant, winning service. But until we see some Internet provider deals — and the content library — we’re sceptical.
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