Are Telecom Providers Finally Becoming Service Aggregators?

    zillionTVZilliongTV, a Sunnyvale, California based startup, is trying what everybody is talking about. They are trying to build a working model for viewing movies and TV programs over the Internet on demand. Instead of the traditional push, a functioning model for pull. There is already one, Hulu, but Hulu is very(!) much an extension of the big content owners who own the movies and does not work outside the US for this very reason. ZillionTV would be a step towards away from them, even if a small one. In effect, ZillionTV mixes Spotify, Videoplaza and Blyk models.

    Just as with Spotify, ZillionTV has partnered with big content owners who are trying figure out how to monetize their content with poor results. What Spotify does for music, ZillionTV tries to do for moviews and TV programs. The vision is nothing short of Spotify’s neither: To secure all the content that’s ever been made in the world. Unlike many others in the IPTV industry, ZillionTV has also something to show as they have some really big companies already onboard (Warner, Universal, Fox and Disney).

    Just as with Blyk, they make the advertising business model interactive and offer a loyalty program and loyalty points that could be redeemed for material goods. And lastly, just as with Videoplaza they aim to build a technology to make video advertising work. Not only this, it’s also not a direct-to-consumer play, but they aim to make deals with telcos, cable operators and other Internet service providers as distribution channels. A rather ambitious model, but also one that’s very much needed. Just today I saw a tweet demading someone to build a “spotify + + netflix to Finland”.

    ZillionTV will also enable the user to buy the movie or the TV program she likes to see. I believe the Spotify model might work here better (advertising based streaming model without the exchange of ownership), when an iTunes model of owning content might have trouble. Clay Shirky makes a relevant point (here) on why the traditional newspaper model is not working: “People like to hear the same song more than once … but there are not many newspaper articles you’d read [even] twice”. I believe same applies here, even if not as clearly, to TV programs. There are very few TV programs I want to own, let alone carry with me like music, where as some songs I want to listen to up to 100 times again and again. Same goes for movies: Some movies like Casablanca I might want to see several times, but even then if I know it’s just matter of turning my TV or computer on and I can go and stream it again, I rather not buy it.

    Despite the fact that the sell-through option might not fly as well as expected, the model might work just fine with the real focus in the advertising based business model. And the buy-to-own content might be there for the sole fact that some content providers have required it or they’d pull out.

    What I see as the most interesting part is ZillionTV’s novel approach to a go-to-market strategy in the industry they aim to change: In ZillionTV’s go-to-market strategy, ISPs would offer the broadband VOD service as an enticement to move to higher-speed tiers. ZillionTV, which streams video in MEPG-4 format, is targeting subscribers with at least a 3-Mbps connection.The video wouldn’t actually traverse the public Internet; rather, ISP distributors would collocate VOD servers in their own facilities for optimal performance. ZillionTV is basing its VOD server infrastructure on Edgeware’s flash-based units, which can serve 32,000 streams in a 1-rack-unit “pizza box.”(read the whole story here)

    Just a Patrick Gauthier, ZillionTV’s senior vice president of marketing and strategy said, “[In this model] telecom providers are becoming service aggregators”. This is potentially big, because now the operators would have a way to work their way out from becoming just plain dum pipes. It’s not a huge step away from that, but considering the imporance of even starting to address the problem is a major step. The cornor stone enabling this development is a Swedish startup Edgeware.

    Edgeware supplies server systems for TV services over IP, providing unique technology with emphasis on cost efficiency. Addressed applications include Time Shift TV, VoD, nPVR and Ad Insertion for cable and telco deployments, as well as Web TV applications for CDN:s and video service providers.

    If ZillionTV’s model work, Edgeware might just have found something very big here.