ZillionTV, the streaming video set-top box-maker that’s backed by media giants like *Disney*, *Fox*, *Sony* and Warner Bros., has laid off a…

ZillionTV screengrab

ZillionTV, the streaming video set-top box-maker that’s backed by media giants like *Disney*, *Fox*, *Sony* and Warner Bros., has laid off an undisclosed number of staff. A former employee, now blogging at XYHD.tv, reports that the company let go roughly a third of its 100-member workforce; ZillionTV would only confirm with MCN that it “realigned its resources,” as part of a shift in its overall business model.

The company emerged from stealth mode in March, with the idea that it would provide an ISP-supported IPTV service, complete with a rewards program that encouraged viewers to watch ads. Customers would only pay an “activation fee” for the free ZillionTV box; with no subscription revenues, the goal was to get users to upgrade to higher data plans with their ISPs (and likely get a rev share). Investors clearly bought into the idea beforehand: After raising a $4 million first round from VCs in early 2008, ZillionTV added around $19 million more from backers like Visa and the big media companies, including an $8.8 million add-on earlier this year.

At some point in the past few months, though, ZillionTV concluded that the ISP-supported route wasn’t sustainable on its own. It pushed the launch back into the latter half of 2010, and said it would also offer a direct-to-consumer version of its box. CEO Mitch Berman explained to MCN that only working with (and waiting for) the ISPs would limit ZillionTV’s potential market penetration — though, with the service still supposed to be free, it’s not clear how or whether there will be enough ad revenue to support its direct-to-consumer iteration, either.

  1. Wow, they crash and burn even they launched. The VC must be unhappy after they found out there is no business model behind this venture.

  2. Realignment hardly indicates "crash and burn." If anything, VCs expect this type of prudence during a business shift.

  3. I received an invitation from ZillionTV to be one of their ‘beta’ customers and should be receiving a box in the next week. So it looks like they are pushing forward. They have a very interesting business model. As long as it focuses on ad subsidized content and not the rental model it has a chance of succeeding. Hulu works because it is free, if ZillionTV only has a handful of shows and movies that are free it will flop. This is why AppleTV has been a failure, nobody wants to pay to stream a TV show or movie.

  4. Lights out for ZillionTV: http://tvninja2010.blogspot.com/


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