ZillionTV Going Direct to Consumers

product-image41ZillionTV announced today that it is expanding its distribution strategy with plans to sell directly to consumers, and has delayed the commercial launch until the second half of 2010 from its initially anticipated debut by the end of this year.

Zillion CEO Mitch Berman told us by phone that the company still plans on using telcos and other ISPs as the primary means of distribution for the service, but in areas not covered by such partnerships, it will sell its set-top box and service direct and will eventually ape the Netflix (s NFLX) model by getting on as many net-connected consumer devices such as Blu-ray players and broadband TVs. The company expects to see products with ZillionTV embedded inside them by the end of next year.

Though the over-the-top video space is becoming increasingly crowded, with the likes of Netflix, Amazon (s AMZN) and Vudu all making their way to your TV set, Zillion is pushing ahead undaunted. The company has 60 content partners and is backed by Warner Bros. (s TWX), Sony (s SNE), Twentieth Century Fox (s NWSA), NBC Universal (s GE), and Visa. Zillion differentiates itself by charging a one-time $100 activation fee to access its content either through rental, purchase or for free with advertising.

The company concluded that its initial strategy of relying solely on telco partnerships would not give its advertising partners, which includes MillerCoors, enough reach.

Zillion expects to go into direct consumer trials by the end of this year. Based in Sunnyvale, Calif., Zillion had raised $18.4 million by the end of 2008, and completed an undisclosed Series B round earlier this year.