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Summary:

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.

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

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  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.

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

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